$925 Million…The Afreximbank: To Nigeria under the $3.3 billion Syndicated Credit Facility Subsidized by the Nigerian National Petroleum Company Limited

By Abdul Rahman Bangura-

NEW AFRICA DAILY NEWS (NADN) Freetown, Sierra Leone– “Arranged and coordinated by Afreximbank, the accordion arrangement saw the raising of a combined total of US$925 million from a consortium of crude oil off-taker lenders including but not limited to the Oando Group and Sahara Energy Resource Limited,” the bank stated in a statement.

This disbursement, “is expected to provide further support for Nigeria’s macroeconomic stability and long-term economic growth while enhancing the country’s industrialization and trade development efforts.”

According to NNPCL’s Chief Executive Officer – Mele Kyari lamented that, “the successful disbursement of the first accordion under project Gazelle and its interest in funding viable and strategic projects is a clear indication of investors’ confidence in NNPCL and Nigeria’s growth aspirations.”

The financing campaign, beckoned Project Gazelle, is Nigeria’s largest crude oil prepayment facility and one of the fastest syndicated loans raised in Africa in 2023, according to Afreximbank.

Afreximbank had before this time, disbursed $2.25 billion under Project Gazelle. “The disbursement of the initial $ 2.25 billion under the facility will support Nigeria’s long-term economic stability, ease access to import financing for raw materials and essential goods, support Industrialization and trade development efforts”. Benedict Oramah – the Afreximbank’s President in a statement on January 12, 2024.

“Investors were keen to consider ticket sizes of $250 million and $500 million amidst current headwinds and year-end pressures in the loan markets”, Afreximbank said at the time. The 5-year facility carries a margin of 6.0% per annum above the 3-months secured overnight financing rate,” Oramah emphasized.

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

Last January, the Central Bank of Nigeria (CBN) noted, it had paid $2 billion in foreign exchange liabilities across diverse sectors encircling petroleum, aviation and manufacturing.

New Africa Daily News Abdul Rahman Bangura Reports, Africa Correspondent