Bank Of Industry Sets Up €1 Billion Loan Guarantee Facility
The Bank of Industry (BoI) has entered into a landmark €1 billion senior secured loan facility to further strengthen its ability to deliver on its mandate.
According to the bank, the initial mandated lead arrangers (IMLA) and underwriters for the senior phase of the transaction, led and coordinated by Africa Finance Corporation (AFC) and Standard Chartered Bank, include Abso Bank Limited (acting through its Corporate and Investment Banking division); First Abu Dhabi Bank PJSC;
FirstRand Bank Limited (London Branch), acting through its Rand Merchant Bank division; Moshreqbonk PSC, Nedbank Limited, London Branch; and SMBC Bank International Plc.
The African Export-Import Bank (Afreximbank) is the Agent Bank.
The bank said: “A syndicate of financial institutions organized by the IMLAs has expressed strong interest in participating in the general phase of the ongoing syndication, and BOI has the option of increasing the size of the facility up to 1 .5 billion euros after general syndication.”
“The deal is quite unique and the first of its kind by a financial institution in Nigeria, both in terms of size and structure.
“The structure of the transaction leverages AFC’s strong investment grade credit rating (rated A3 with a stable outlook by Moody’s) to wrap and enhance BoI credit, thereby benefiting from favorable terms that would not otherwise be not available, particularly on these very volatile markets.The pricing, at 3-month Euribor (floored at zero) + 1.65% per year, results from this innovative structuring.
Commenting on the transaction, the bank’s managing director, Mr. Kayode Pitan, pointed out that “at a time when international capital markets are closed to many borrowers and when capital is prohibitively expensive, thanks to this innovative transaction structure and the AFC guarantee, BOI was not only able to raise cash, but also to diversify its funding sources and attract new lenders.
This is the fifth time that BOI has successfully raised funds in international markets since 2018. With the closing of this transaction, the total funds raised by the bank from 2018 to date exceeds $5 billion.
“The proceeds of this agreement, as in our previous ones, will be used to provide much-needed medium to long-term financing to Nigerian MSMEs and large corporates with bankable transactions at affordable Naira interest rates,” Pitan said.
Between 2015 and 2021, the BoI, with the support of its various stakeholders, disbursed over 1.2 trillion naira to 4,205,920 companies, creating over 9,048,444 million estimated direct and indirect jobs.
The Governor of the Central Bank of Nigeria (CBN) and the CBN Board of Governors supported the BoI by providing full collateral to facilitate the AFC guarantee and 100% currency swap to mitigate currency risk.