A $3.3 billion crude facility, supported by NNPC, sees Afreximbank and UBA announcing the initial disbursement of $2.25 billion.

The African Export-Import Bank (Afreximbank) has successfully coordinated a syndicated crude oil prepayment facility valued at US$3.3 billion, backed by the Nigerian National Petroleum Company Limited (NNPCL). An initial disbursement of US$2.25 billion has already been executed, with a second tranche of US$1.05 billion expected to follow.

In this significant financial arrangement, United Bank for Africa Plc (UBA) played a crucial role as the Local Arranger and Onshore Account Bank. The purpose of this transaction is to alleviate foreign exchange challenges and bring stability to the Nigerian currency market, representing a substantial stride towards unlocking Nigeria’s economic potential.

This groundbreaking financing stands as Nigeria’s most extensive crude oil prepayment facility and ranks among the largest syndicated loans raised in Africa in 2023. The 5-year facility carries a margin of 6.0% per annum above the 3-month secured overnight financing rate (SOFR). Notably, the transaction structure includes a built-in price balance mechanism, releasing 90% of excess cash from committed barrel sales to the borrower, while the remaining 10% is allocated to prepay the facility, thereby shortening its final maturity.

Afreximbank, Gunvor International BV, and Sahara Energy Resources Limited are the initial participating lenders in this venture. Afreximbank, leveraging its extensive experience in structuring complex oil and gas financing facilities across various African nations, acted as the Sole Mandated Lead Arranger, Technical and Modelling Bank, Bookrunner, Facility Agent, Offshore Account Bank, Intercreditor Agent, and Collateral Agent.

Expressing satisfaction with the successful financial close, Afreximbank President Prof. Benedict Oramah emphasized the bank’s commitment to supporting African economies in challenging times. The disbursement of the initial US$2.25 billion is expected to contribute to Nigeria’s long-term economic stability, facilitate import financing for raw materials, and bolster industrialization and trade development efforts.

NNPCL Group Chief Executive Officer, Mr. Mele Kolo Kyari, highlighted the significance of the facility in improving macro-economic stability, acknowledging the global, international, and regional syndication firms’ participation as a vote of confidence in Nigeria’s market.

Oliver Alawuba, the Group Managing Director/CEO of UBA, expressed the institution’s delight in participating in this transaction, showcasing UBA’s commitment to addressing economic challenges in Nigeria and across Africa. UBA, as a leading Pan-African financial institution, with a vast network and presence in multiple countries, continues to play a pivotal role in connecting people and businesses across the continent through its diverse banking services.