African Export-Import Bank and the United Bank for Africa have disbursed $2.25bn of the $3.3bn oil-for-cash loan facility arranged by the Nigerian National Petroleum Company Limited.

In a statement from UBA over the weekend, an initial disbursement of $2.25bn has been made and a second tranche of $1.05bn is expected to be disbursed subsequently.

UBA, which is the Local Arranger and Onshore Account Bank for the transaction said that the five-year facility carries a margin of 6.0 per cent per annum above the three-month secured overnight financing rate.

The transaction structure has an embedded price balance mechanism where 90 per cent of all excess cash from the sale of the committed barrels (after debt service) will be released to the borrower, while the balance of 10 per cent will be used to repay the facility, effectively shortening the final maturity of the facility and freeing cash flow from future pledged cargoes for use by Nigeria.

Commenting on the successful financial close, Afreximbank President and Chairman of the Board of Directors, Benedict Oramah, said, “This facility further demonstrates the Bank’s commitment to supporting African economies, when such assistance is most needed. Afreximbank stands by its member countries in good and difficult times. The disbursement of the initial $2.25bn under the facility will support Nigeria’s long-term economic stability, ease access to import financing for raw materials and essential goods, and support industrialisation and trade development efforts.  We are pleased that despite the typical year-end pressures, our partners and investors committed the funds required in record time. We thank them for their support.”

The NNPCL Group Chief Executive Officer, Mele Kolo Kyari, said that the proceeds of the facility have been made available to the federal government as one of the strategies to improving macro-economic stability.

“The participation of global, international and regional syndication firms is a further testament to the lending market’s appetite for financing sponsored by NNPCL and signifies solid market confidence in Nigeria,” Kyari said.

Punch