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United Bank for Africa Plc (UBA) acted as the Local Arranger
and Onshore Account Bank for the transaction, which is expected to ease the
foreign exchange illiquidity and stabilise the Nigerian currency market. The
transaction is seen as a significant further step in unleashing Nigeria’s
economic potential.
This landmark financing is Nigeria’s largest crude oil
prepayment facility and one of the largest 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 structure has an
embedded price balance mechanism where 90% of all excess cash from the sale of
the committed barrels (after debt service) will be released to the borrower,
while the balance of 10% will be used to prepay the facility, effectively
shortening the final maturity of the facility and freeing cashflow from future
pledged cargoes for use by Nigeria.
The initial participating lenders are Afreximbank, Africa’s
multilateral trade finance institution, Gunvor International BV, a Geneva-based
multinational energy and commodities trading company and Sahara Energy
Resources Limited, an African-owned, leading international energy and
infrastructure conglomerate.
Afreximbank’s extensive structuring and technical experience
in arranging similar complex oil & gas financing facilities in Angola,
Republic of Congo, South Sudan, Chad Egypt, Cote d’Ivoire. Ghana, etc. was
brought to bear in the successful closure of the facility, notwithstanding a
very challenging market environment. The Bank acted as Sole Mandated Lead
Arranger, Technical and Modelling Bank, Bookrunner, Facility Agent, Offshore
Account Bank, Intercreditor Agent and Collateral Agent.
Lauding the successful financial close, Afreximbank
President and Chairman of the Board of Directors, Prof. Benedict Oramah,
explained: “This facility further demonstrates the Bank’s commitment to
supporting African economies, when such assistance is most needed. Afreximbank
stands by its member countries in good and in difficult times.
The disbursement of the initial US$ 2.25 billion under the
facility will support Nigeria’s long-term economic stability, ease access to
import financing for raw materials and essential goods, support
industrialization and trade development efforts. We are pleased that despite
the typical year-end pressures, our partners and investors committed the funds
required in record time. We thank them for their support”.
The NNPCL Group Chief Executive Officer, Mr. Mele Kolo
Kyari, commented on the landmark transaction, noting: “The proceeds of the
facility have been made available to the Federal Republic of Nigeria as one of
the strategies to improving macro-economic stability. The participation of
global, international and regional syndication firms is a further testament to
the lending market’s appetite for financing sponsored by NNPCL and signifies
solid market confidence in Nigeria.”
The Group Managing Director/CEO, of United Bank for Africa
(UBA), Oliver Alawuba, said: “UBA is delighted to participate in this
transaction, which demonstrates once again UBA’s commitment to providing
necessary interventions and solutions towards addressing economic issues in
Nigeria and across Africa.
UBA has a track record of structuring and participating in
significant resource-based transactions, leveraging its global network and
dollar balance sheet. Similar transactions include DRC deal, Kenyan deal,
Senegal SAR Orion deal with Afreximbank.”
United Bank for Africa Plc is a leading Pan-African
financial institution, offering banking services to more than twenty-seven (27)
million customers, across 1,000 business offices and customer touch points in
20 African countries. With presence in New York, London, Paris, and Dubai, UBA
is connecting people and businesses across Africa through retail, commercial
and corporate banking, innovative cross-border payments and remittances, trade
finance and ancillary banking services.