The African Export-Import Bank (Afreximbank) and the United Bank for Africa (UBA) have successfully disbursed $2.25 billion from the $3.3 billion oil-for-cash loan facility arranged by the Nigerian National Petroleum Company Limited (NNPCL).
According to a statement from UBA over the weekend, the initial disbursement has been completed, and a second tranche of $1.05 billion is expected to be disbursed subsequently.
UBA, serving as the Local Arranger and Onshore Account Bank for the transaction, outlined that the five-year facility carries a margin of 6.0 percent per annum above the three-month secured overnight financing rate.
The transaction structure incorporates an embedded price balance mechanism. Under this mechanism, 90 percent of all excess cash generated from the sale of the committed barrels (after debt service) will be released to the borrower. The remaining 10 percent will be utilized to repay the facility, effectively shortening the final maturity of the facility and freeing cash flow from future pledged cargoes for use by Nigeria.
Afreximbank President and Chairman of the Board of Directors, Professor Benedict Oramah, expressed satisfaction with the successful financial close, emphasizing the bank’s commitment to supporting African economies in challenging times. He noted that the disbursement of the initial $2.25 billion would contribute to Nigeria’s long-term economic stability, facilitate access to import financing for raw materials and essential goods, and support industrialization and trade development efforts.
The Group Chief Executive Officer of NNPCL, Mele Kolo Kyari, highlighted that the proceeds from the facility have been made available to the federal government as part of a strategy to improve macroeconomic stability. Kyari also underscored the global, international, and regional syndication firms’ participation, indicating strong market confidence in Nigeria and reflecting the lending market’s appetite for financing sponsored by NNPCL.
