Afreximbank And UBA Extend $2.25Bn Crude Oil Prepayment Facility For Nigeria

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A collaborative crude oil prepayment facility, totalling $3.3 Billion, and sponsored by the Nigerian National Petroleum Company Limited (NNPCL), has been orchestrated by the African Export-Import Bank (Afreximbank). The initial disbursement of $2.25 Million has already been made, with an additional tranche of $1.05 Million anticipated in subsequent stages.

United Bank for Africa Plc (UBA) played an important role as the Local Arranger and Onshore Account Bank in facilitating this transaction, aimed at addressing foreign exchange challenges and stabilising the Nigerian currency market.

Considered a significant stride in unlocking Nigeria’s economic potential, this financing arrangement stands as the country’s largest crude oil prepayment facility, and one of Africa’s most substantial syndicated loans in 2023.

The 5-year facility, carrying a margin of 6.0 Percent per annum above the 3-month Secured Overnight Financing Rate (SOFR), includes a unique price balance mechanism. Under this structure, 90 Percent of excess cash from committed barrel sales will be released to the borrower after debt service, while the remaining 10 Percent will prepay the facility; effectively shortening its final maturity, and freeing up future pledged cargoes for Nigeria’s use.

Initial participating lenders include Afreximbank, Gunvor International BV, and Sahara Energy Resources Limited. Afreximbank, serving multiple roles such as Sole Mandated Lead Arranger, Technical and Modelling Bank, Bookrunner, Facility Agent, Offshore Account Bank, Intercreditor Agent, and Collateral Agent, demonstrated its extensive experience in similar complex oil & gas financing in various African countries.

Professor Benedict Oramah, Afreximbank President and Chairman of the Board of Directors, expressed the bank’s commitment to supporting African economies in challenging times. He highlighted that the facility’s disbursement would contribute to Nigeria’s economic stability, facilitate import financing, and aid industrialisation and trade development.

Mele Kolo Kyari, NNPCL Group Chief Executive Officer, emphasised the positive impact of the facility on Nigeria’s macroeconomic stability; acknowledging the market’s confidence in the country. Oliver Alawuba, Group Managing Director/CEO of UBA, reiterated the bank’s dedication to addressing economic issues in Nigeria and Africa, leveraging its global network and financial capabilities.

 

 

 

 

 

 

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