The African Export-Import Bank (Afreximbank) and the United Bank for Africa (UBA) have successfully disbursed $2.25 billion as part of the $3.3 billion oil-for-cash loan facility arranged by the Nigerian National Petroleum Company Limited (NNPC). In a statement released over the weekend, UBA, serving as the Local Arranger and Onshore Account Bank for the transaction, confirmed the initial disbursement and announced that a second tranche of $1.05 billion is expected to follow.
The five-year facility carries a margin of 6.0 percent per annum above the three-month secured overnight financing rate. The transaction structure includes an embedded price balance mechanism, where 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 used to repay the facility, effectively shortening the final maturity and freeing up cash flow from future pledged cargoes for use by Nigeria.
Commenting on the successful financial close, Professor Benedict Oramah, President and Chairman of the Board of Directors at Afreximbank, stated, “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 oil-for-cash loan facility is a significant development in supporting Nigeria’s financial requirements and ensuring flexibility in managing cash flow from oil sales.
