A $3.3 billion crude oil prepayment facility is set to receive a significant boost, as Afreximbank and United Bank of Africa have disbursed an impressive $2.25 billion in initial funding

Afreximbank and UBA
Afreximbank and UBA

Afreximbank has successfully facilitated a syndicated US$3.3 billion crude oil prepayment facility sponsored by the Nigerian National Petroleum Company Limited (NNPCL).

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United Bank for Africa Plc (UBA) acted as the Local Arranger and Onshore Account Bank for the transaction, which aims to alleviate foreign exchange illiquidity and stabilize the Nigerian currency market.

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The facility, Nigeria’s largest crude oil prepayment facility and one of Africa’s largest syndicated loans in 2023 carries a margin of 6.0% per annum above the 3-month secured overnight financing rate (SOFR).

The 5-year facility includes an embedded price balance mechanism, releasing 90% of excess cash from committed barrel sales to the borrower, while the remaining 10% pre-pays the facility. This structure shortens the final maturity and frees up cash flow from future pledged cargoes for Nigeria’s use.

The initial participating lenders include Afreximbank, Gunvor International BV, and Sahara Energy Resources Limited. Afreximbank, acting as the Sole Mandated Lead Arranger, played multiple roles such as Technical and Modelling Bank, Bookrunner, Facility Agent, Offshore Account Bank, Intercreditor Agent, and Collateral Agent.

Prof. Benedict Oramah, President and Chairman of Afreximbank’s Board of Directors, highlighted the bank’s commitment to supporting African economies and member countries, even in challenging times.

The disbursement of the initial US$2.25 billion under the facility is expected to contribute to Nigeria’s economic stability, enhance access to import financing, and support industrialization and trade development efforts.

Mele Kolo Kyari, NNPCL Group Chief Executive Officer, emphasized that the facility’s proceeds would improve macroeconomic stability in Nigeria. The successful participation of global, international, and regional syndication firms reflects market confidence in Nigeria.

Oliver Alawuba, Group Managing Director/CEO of UBA, expressed delight in participating in the transaction, showcasing UBA’s commitment to addressing economic issues in Nigeria and across Africa. UBA’s track record includes significant resource-based transactions, aligning with the bank’s global network and dollar balance sheet.

UBA, a leading Pan-African financial institution, serves over 27 million customers across 20 African countries, offering a range of banking services, including retail, commercial, and corporate banking, cross-border payments, remittances, trade finance, and ancillary banking services.

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