LAGOS, January 13, 2024: In a groundbreaking development, the African Export-Import Bank (Afreximbank) has successfully orchestrated a syndicated US$3.3 billion crude oil prepayment facility sponsored by the Nigerian National Petroleum Company Limited (NNPCL). The landmark transaction marks Nigeria’s largest crude oil prepayment facility and stands as one of the largest syndicated loans raised in Africa in 2023.
A significant boost to Nigeria’s economic potential, the 5-year facility, with a margin of 6.0% per annum above the 3-month secured overnight financing rate (SOFR), is poised to enhance foreign exchange liquidity and stabilise the Nigerian currency market. The structure includes a unique embedded price balance mechanism, with 90% of excess cash from committed barrel sales being released to the borrower and the remaining 10% used to prepay the facility.
United Bank for Africa Plc (UBA) played a crucial role as the local arranger and offshore account bank for the transaction. Oliver Alawuba, the Group Managing Director and CEO of UBA, expressed delight in participating in the transaction, emphasising UBA’s commitment to addressing economic issues in Nigeria and across Africa.
The initial disbursement of US$2.25 billion has been made, with a second tranche of US$1.05 billion expected to follow. The syndicate comprises Afreximbank, Gunvor International BV, and Sahara Energy Resources Limited, reflecting global, international, and regional participation.
Afreximbank President and Chairman of the Board of Directors, Prof. Benedict Oramah, lauded the successful financial close, underscoring the bank’s commitment to supporting African economies, especially during challenging times. The facility aims to support Nigeria’s long-term economic stability, facilitate access to import financing for raw materials, and bolster industrialization and trade development efforts.
NNPCL Group Chief Executive Officer, Mr. Mele Kolo Kyari, highlighted the strategic importance of the facility in improving macro-economic stability and expressed gratitude for the solid market confidence in Nigeria demonstrated by the global, international, and regional syndication firms.
This historic financing represents a significant milestone for Nigeria, showcasing the nation’s ability to attract global investments and marking a crucial step in unlocking its economic potential.
