The African Export-Import Bank (Afreximbank) has successfully disbursed the initial tranche of a syndicated $3.3 billion crude oil prepayment loan to the Nigerian National Petroleum Company Limited (NNPC). The initial disbursement, totaling $2.25 billion, marks Nigeria’s largest crude oil prepayment facility and one of the continent’s largest syndicated loans in 2023. Afreximbank, the Sole Mandated Lead Arranger, facilitated the transaction alongside participating lenders, including Gunvor International BV and Sahara Energy Resources Limited.
The 5-year facility, with a margin of 6.0 per cent per annum above the 3-month secured overnight financing rate (SOFR), has faced scrutiny in Nigeria due to concerns about its impact on the country’s growing debt profile. The loan structure includes a price balance mechanism, releasing 90 per cent of excess cash from committed crude oil sales for other uses by Nigeria, effectively shortening the loan’s final maturity.
Afreximbank President, Benedict Oramah, emphasized the bank’s commitment to supporting African economies, stating that the disbursement will contribute to Nigeria’s long-term economic stability, facilitate import financing, and support industrialization and trade development efforts. Despite criticism, the financial closure was achieved in record time, showcasing market confidence and support from partners and investors.
NNPC’s group CEO, Mele Kyari, highlighted that the facility’s proceeds contribute to improving macro-economic stability, and the participation of global, international, and regional syndication firms reflects market confidence in Nigeria. United Bank for Africa Plc (UBA), acting as the Local and Onshore Account Bank, expressed delight in participating in the transaction, reinforcing its commitment to addressing economic challenges in Nigeria.
