The African Export-Import Bank (Afreximbank) has announced its remittance of $2.25 billion out of the $3.3 billion crude oil prepayment facility recently approved for Nigeria.
The disbursement of the sum is contained in a statement by the bank posted on its website.
The lender further said a second tranche of $1.05 billion is expected to be disbursed subsequently.
The facility will support Nigeria’s macroeconomic stability and long-term economic growth, facilitating access to raw materials and trade development.
It is expected to ease the foreign exchange illiquidity and stabilise the Nigerian currency market.
The statement explained that the five-year facility carries a margin of 6.0 per cent per annum above the three-month secured overnight financing rate.
“The transaction structure has an embedded price balance mechanism where 90 per cent 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 per cent will be used to repay the facility, effectively shortening the final maturity of the facility and freeing cash flow from future pledged cargoes for use by Nigeria.
“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 $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, and support industrialisation 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 president and chairman of the board of directors, Afreximbank, Mr Benedict Oramah, said in the statement.
The bank further disclosed that its extensive structuring and technical experience in arranging similar complex oil and gas financing facilities in Angola, the Republic of Congo, South Sudan, Chad Egypt, and Cote d’Ivoire. Ghana and others were brought to bear in the successful closure of the facility, despite a very challenging environment.
“The bank acted as sole mandated lead arranger, technical and modelling bank, book runner, facility agent, offshore account bank, inter-creditor agent and collateral agent,” the statement added.
The initial participating lenders are Afreximbank, 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.
The statement also quoted the n his part, the group chief executive officer of the Nigeria Petroleum Company Limited (NPC), Mr. Mele Kyari as saying that “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.”
Also speaking on the deal, the GMD/CEO of United Bank for Africa (UBA), Mr 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 the DRC deal, Kenyan deal, Senegal SAR Orion deal with Afreximbank.”
