The Nigerian National Petroleum Company Limited (NNPCL) has obtained a syndicated US$3.3 billion crude oil prepayment facility, with support from the African Export-Import Bank (Afreximbank) despite the difficulties faced by the financial markets at the end of the year.
This is a historic deal – the biggest of its kind in Nigeria and one of the largest syndicated loans in Africa in 2023, expected to boost its economic stability.
The first tranche of US$2.25 billion has been disbursed, and another US$1.05 billion is expected to follow soon.
It (the facility) attracted many investors, who offered amounts between US$250 million and US$500 million.
The facility has a 5-year tenor and a margin of 6.0% per annum above the 3-month secured overnight financing rate (SOFR).
It also has a unique feature that allows 90% of the surplus cash from the sale of the oil barrels to be used for debt repayment, while the remaining 10% will be used to prepay the facility.
Afreximbank was the key player in this deal, acting as the Sole Mandated Lead Arranger, Technical and Modelling Bank, Bookrunner, Facility Agent, Offshore Account Bank, Intercreditor Agent, and Collateral Agent.
United Bank for Africa Plc (UBA) also participated as the Local Arranger and Onshore Account Bank.
Prof. Benedict Oramah, President and Chairman of Afreximbank, praised the fast financial close, saying, “this facility shows the Bank’s dedication to helping African economies when they need it the most.”
The initial disbursement of US$2.25 billion will help Nigeria achieve long-term economic stability, access import financing for raw materials, support industrialization, and advance trade development initiatives.
Mele Kolo Kyari, NNPCL Group Chief Executive Officer, said that the funds will “improve the macro-economic stability of the Federal Republic of Nigeria.”
The global, international, and regional involvement of syndication firms demonstrates the high level of market confidence in Nigeria, as well as the country’s attractiveness as an investment destination.
This financing showcases Afreximbank’s skills in arranging oil and gas financing facilities across the African continent.