The African Export-Import Bank (Afreximbank) has confirmed the initial disbursement of $2.25 billion out of the approved $3.3 billion crude oil prepayment facility for Nigeria.
The facility, aimed at alleviating the acute foreign exchange (FX) shortage in the country, is expected to enhance economic activities and restore investor confidence.
United Bank for Africa Plc (UBA) played a pivotal role as the Local Arranger and Onshore Account Bank for the transaction, sponsored by the Nigerian National Petroleum Company Limited (NNPCL).
The facility, a significant step in resolving FX backlogs, received assurance from President Bola Tinubu in December.
The five-year facility, structured with a margin of six per cent per annum above the three-month secured overnight financing rate (SOFR), includes an embedded price balance mechanism.
This mechanism allows 90 per cent of excess cash from the sale of committed barrels to be released to the borrower, with the remaining 10 per cent used to repay the facility.
Afreximbank announced the successful initial disbursement of $2.25 billion, with a second tranche of $1.05 billion expected to follow.
The participating lenders in the landmark financing include Afreximbank, Gunvor International BV, and Sahara Energy Resources Limited.
Described as the largest syndicated loan ever raised by Nigeria in the international market, this transaction signifies a substantial vote of confidence in Nigeria and Africa.
Afreximbank’s President, Prof. Benedict Oramah, emphasized the bank’s commitment to supporting African economies in challenging times.
He said the disbursement aims to enhance Nigeria’s long-term economic stability, facilitate access to import financing, and support industrialization and trade development.
“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,” he said.
Mele Kolo Kyari, Group Chief Executive Officer of NNPCL, highlighted the strategic use of the facility to improve 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,” Kyari said.
Oliver Alawuba, Group Managing Director/CEO of UBA, expressed the bank’s delight in participating in the transaction, saying: “UBA is delighted to participate in this transaction which accentuates its commitment to providing necessary interventions and solutions towards addressing economic issues in Nigeria”.
Previous transactions include deals in the DRC, Kenya, Senegal, and more in collaboration with Afreximbank.
