In a groundbreaking move, the African Export-Import Bank (Afreximbank) successfully facilitated a syndicated US$3.3 billion crude oil prepayment facility, sponsored by the Nigerian National Petroleum Company Limited (NNPCL). This initiative, supported by an initial disbursement of US$2.25 million, marks a pivotal moment in Nigeria’s economic landscape, with a second tranche of US$1.05 million expected to follow.
United Bank for Africa Plc (UBA) played a crucial role as the Local Arranger and Onshore Account Bank, contributing to the transaction’s significance in alleviating foreign exchange illiquidity and stabilizing the Nigerian currency market. This financing is deemed instrumental in unlocking Nigeria’s economic potential.
Distinguished as Nigeria’s largest crude oil prepayment facility, this undertaking ranks among the most substantial syndicated loans raised in Africa in 2023. The 5-year facility carries a margin of 6.0% per annum above the 3-month secured overnight financing rate (SOFR).
The transaction incorporates an innovative price balance mechanism, releasing 90% of excess cash from committed barrel sales to the borrower, thereby shortening the final maturity of the facility. This strategic approach liberates cashflow from future pledged cargoes for Nigeria’s utilization.
Key participating lenders include Afreximbank, Gunvor International BV, a Geneva-based multinational energy and commodities trading company, and Sahara Energy Resources Limited, an African-owned international energy and infrastructure conglomerate.
Afreximbank’s unparalleled structuring and technical expertise, honed through similar oil & gas financing facilities across Africa, played a pivotal role in the successful closure of this complex deal, defying a challenging market environment. The Bank assumed various roles, serving as Sole Mandated Lead Arranger, Technical and Modeling Bank, Bookrunner, Facility Agent, Offshore Account Bank, Intercreditor Agent, and Collateral Agent.
Prof. Benedict Oramah, President and Chairman of the Board of Directors at Afreximbank, celebrated the financial close, emphasizing the institution’s commitment to supporting African economies, especially in challenging times. The disbursement of the initial US$2.25 billion underlines Afreximbank’s dedication to fostering Nigeria’s long-term economic stability, facilitating access to import financing, and supporting industrialization and trade development efforts.
Mele Kolo Kyari, NNPCL Group Chief Executive Officer, highlighted the strategic importance of the facility in improving macro-economic stability. He noted the global, international, and regional syndication firms’ participation as a testament to the market’s confidence in Nigeria.
Oliver Alawuba, Group Managing Director/CEO of United Bank for Africa (UBA), expressed UBA’s delight in participating in this transformative transaction. Alawuba emphasized UBA’s commitment to providing interventions and solutions to address economic issues in Nigeria and across Africa. UBA’s involvement in significant resource-based transactions, such as the DRC deal, Kenyan deal, and Senegal SAR Orion deal with Afreximbank, further solidifies its position as a key player in the continent’s financial landscape.
United Bank for Africa Plc, with its extensive Pan-African reach, continues to connect people and businesses across the continent through a range of banking services, innovative cross-border payments, trade finance, and ancillary banking services.