(3 Minutes Read)
The African Export-Import Bank (Afreximbank) and United Bank for Africa (UBA) have released USD 2.25 billion from the USD 3.3 billion oil-for-cash loan facility arranged by the Nigerian National Petroleum Company Limited (NNPCL).
An initial disbursement of USD 2.25 billion has been executed, with a subsequent second tranche of USD 1.05 billion expected to be disbursed. The USD 3.3 billion emergency loan was secured to stabilize the country’s volatile foreign exchange market and relieve its outstanding USD 7 billion forex liabilities. The five-year facility carries a 6 per cent per annum margin above the three-month secured overnight financing rate. The disbursement of the initial USD 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, stated Afreximbank President and Chairman of the Board of Directors, Benedict Oramah. He expressed the bank’s dedication to supporting African economies when such assistance is most needed.
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.
Read Also:
https://trendsnafrica.com/nigerias-extractive-industry-earns-n14-38-trillion/
https://trendsnafrica.com/petrol-scarcity-continues-in-nigeria-large-queues-near-petrol-pumps/
NNPCL Group Chief Executive Officer, Mele Kolo Kyari, stated that the proceeds of the facility have been provided to the federal government as one of the strategies to enhance 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, he further said.
