The Bank of Industry (BoI) has just successfully concluded a landmark $1 billion loan syndication transaction to improve its capacity to effectively support micro, small, medium and large enterprises across key sectors of the Nigerian economy with affordable medium to long-term loans, alongside moratorium benefits.
The transaction marks the third major international debt syndication deal successfully concluded by BoI within the last three years. In 2018, the bank raised the sum of $750 million, arranged by African Export-Import Bank (Afreximbank) which has been fully repaid.
Again, in March this year, the bank concluded another $1 billion loan deal, lead arranged by Afreximbank, Credit Suisse, Rand Merchant Bank and Sumitomo Mitsui Banking Corporation Europe Limited (SMBC).
Afreximbank and Credit Suisse acted as co-ordinating mandated lead arrangers, underwriters, and bookrunners of the transaction. Africa Finance Corporation (AFC), First Rand (Rand Merchant Bank) and Sumitomo Mitsui Banking Corporation subsequently joined as mandated lead arrangers and bookrunners, while the Export-Import Bank of China joined as a mandated lead arranger. Afreximbank acted as the facility agent and security trustee for the deal.
The bank said in a statement that 28 international financial institutions and funds participated in the transaction, which was initially launched at $750 million, but upsized to US$1 billion due to over-subscription.
It stated that the facility will be disbursed in Naira at single digit interest rates to borrowers with bankable projects.
“Key factors that led to the success of this deal despite the challenges presented by the COVID-19 pandemic include amongst others, the impressive credit ratings of the bank (long term issuer default rating of B with stable outlook from Fitch, long term issuer rating of B2 from Moody’s and Aa from Agusto), its ISO certifications in both Quality Management Systems and Information Security, as well as the strong strategic partnership that the bank has developed with the Nigerian commercial banks, which patriotically continue to provide credit enhancements and de-risking tools to BoI customers.
“Of particular and special note is the support of our owners – the Federal Ministry of Finance Incorporated and the Central Bank of Nigeria – the Federal Ministry of Finance, Budget and National Planning and our supervising ministry – the Federal Ministry of Industry, Trade and Investment.
The Governor of the Central Bank of Nigeria, Godwin Emefiele, and his Committee of Governors supported BoI by providing a full guarantee for the facility and a 100 percent currency swap to mitigate the foreign exchange rate risk.
“With the successful conclusion of this deal, the Board and management of the Bank of Industry is confident that the bank is now better positioned to catalyze domestic production and facilitate job creation on a transformational scale, enhance local industry competitiveness, attract domestic and foreign investments, integrate our local industries into domestic, regional and global value chains, grow our export earnings and positively impact the overall economic development of Nigeria in line with its mandate, especially in light of the planned commencement of the African Continental Free Trade Agreement (AfCFTA) this month (January 2021),” the bank said in the statement.