The African Export-Import Bank (Afreximbank) has successfully disbursed the initial tranche of its $3.3 billion crude oil prepayment loan to the Nigerian National Petroleum Company Limited (NNPC). The initial disbursement amounts to approximately $2.25 billion, with the second and final tranche of $1.05 billion expected later. This facility is termed Nigeria’s largest crude oil prepayment facility and stands among the largest syndicated loans raised in Africa in 2023.
Investors, considering ticket sizes of $250 million and $500 million, participated in the landmark financing amid current financial market challenges. The terms of the 5-year facility carry a margin of 6.0% per annum above the 3-month secured overnight financing rate (SOFR). The transaction structure includes a mechanism where 90% of excess cash from the sale of committed barrels of crude oil would be released after debt service, shortening the final maturity of the loan. Afreximbank acted as the Sole Mandated Lead Arranger, playing multiple roles, while United Bank for Africa Plc (UBA) acted as the Local and Onshore Account Bank.
Afreximbank President Benedict Oramah highlighted the bank’s commitment to supporting African economies during challenging times. The facility aims to contribute to Nigeria’s economic stability, facilitate import financing, and support industrialization and trade development. NNPC’s group CEO, Mele Kyari, emphasized that the proceeds would enhance macroeconomic stability, with global, international, and regional syndication firms’ participation indicating confidence in Nigeria’s market. The group CEO of UBA, Oliver Alawuba, expressed the bank’s commitment to providing solutions for economic challenges in Nigeria.
The disbursement of this substantial prepayment loan underlines the financial collaboration between Afreximbank and NNPC to bolster Nigeria’s economic stability and development efforts.
