To support macroeconomic stability, long-term economic growth…: UBA plays key role in Nigeria’s highest syndicated loan in int’l market!.

The financial institution recently played a key role in acting as the Local Arranger and Onshore Account Bank for the syndicated US$3.3 billion Crude Oil Prepayment Facility Sponsored by the Nigerian National Petroleum Company Limited, NNPCL. 

The transaction is expected to ease the foreign exchange illiquidity and stabilise the Nigerian currency market as well as serve as a further step in unleashing Nigeria’s economic potential.

The syndicated US$3.3 billion transaction, it should be said, was successfully arranged by African Export-Import Bank (Afreximbank). 

Announcement of an initial disbursement of US$2.25 million has been made for the transaction while a second tranche of US$1.05 million is expected to be disbursed subsequently.

The landmark financing, it was disclosed, is the highest syndicated loan ever raised by Nigeria in the international market and one of the largest syndicated transactions in Africa in recent years.

The facility, it was further revealed, will support Nigeria’s macroeconomic stability and long-term economic growth, facilitating access to raw materials and trade development.

The groundbreaking transaction, officials added, represents a significant vote of confidence in Nigeria and Africa. 

About the transaction 

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.

Afreximbank President lauds deal 

Afreximbank President and Chairman of the Board of Directors, Prof Benedict Oramah, lauded the transaction.

He explained that “this facility further demonstrates the Bank’s commitment to supporting African economies, when such assistance is most needed”.

Prof Oramah said 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,” Prof Oramah said. 

Enter NNPCL Group CEO

The Nigerian National Petroleum Company Limited, NNPCL, Group Chief Executive Officer, CEO, Mele Kolo Kyari, said proceeds of the landmark transaction are seen as one of the strategies to improving Nigeria’s 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,” Mele Kolo Kyari said. 

UBA committed to addressing economic issues

The Group Managing Director/CEO of UBA, Oliver Alawuba, said the financial institution’s role in the transaction lends credence to its commitment to provide solutions to economic issues. 

“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,” he said.

The Group Managing Director/CEO of UBA, added that: “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”. 

About UBA 

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.