CAIRO/Egypt: In a historic financial maneuver, the African Export-Import Bank (Afreximbank) has orchestrated a groundbreaking syndicated US$3.3 billion crude oil prepayment facility on behalf of the Nigerian National Petroleum Company Limited (NNPCL). With an initial disbursement of US$2.25 billion already completed, a second tranche of US$1.05 billion is slated for subsequent disbursement.
This transaction stands as Nigeria’s largest crude oil prepayment facility and emerges as one of the most substantial syndicated loans raised in Africa throughout 2023. Against the backdrop of prevailing market challenges and year-end pressures in the loan markets, investors exhibited keen interest in ticket sizes of US$250 million and US$500 million.
The 5-year facility, carrying a margin of 6.0% per annum above the 3-month secured overnight financing rate (SOFR), incorporates an innovative embedded price balance mechanism. Under this structure, 90% of all excess cash generated from the sale of the committed barrels (after debt service) will be released, while the remaining 10% will be utilized to prepay the facility. This strategic move effectively shortens the final maturity of the facility, liberating cash flow from future pledged cargoes for deployment by Nigeria.
The initial consortium of lenders includes 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.
Leveraging its extensive experience in structuring complex oil and gas financing facilities across various African nations, Afreximbank assumed key roles in this venture. The bank served as the Sole Mandated Lead Arranger, Technical and Modeling Bank, Bookrunner, Facility Agent, Offshore Account Bank, Intercreditor Agent, and Collateral Agent. United Bank for Africa Plc (UBA) played a crucial role as the Local Arranger and Onshore Account Bank.
In response to the successful financial close, Prof. Benedict Oramah, President and Chairman of the Board of Directors at Afreximbank, emphasized the bank’s commitment to supporting African economies in challenging times. He highlighted that the initial disbursement of US$2.25 billion would contribute to Nigeria’s long-term economic stability, facilitate access to import financing for essential goods and raw materials, and bolster industrialization and trade development efforts.
Mr. Mele Kolo Kyari, NNPCL Group Chief Executive Officer, underscored the significance of the facility, stating that the proceeds would enhance macro-economic stability for the Federal Republic of Nigeria. He noted the global, international, and regional participation as a testament to the lending market’s confidence in Nigeria.
Oliver Alawuba, Group Managing Director/CEO of United Bank for Africa (UBA), expressed delight at UBA’s participation in the transaction, emphasizing the bank’s commitment to providing interventions and solutions to address economic challenges in Nigeria.
