In line with the focus of President Muhammadu Buhari’s administration to revitalise Nigeria’s Industrial sector and create 10 million jobs by leveraging the Nigeria Industrial Revolution Plan and the Economic Recovery and Growth Plan, the Bank of Industry (BOI) has just successfully concluded a landmark US1bn loan syndication transaction.
The transaction is aimed at further improving the capacity of the bank to continue to effectively support Micro, Small, Medium and Large enterprises (across key sectors) of the Nigerian economy with affordable loans of medium to long-term, alongside moratorium benefits.
This transaction marks the third major international debt syndication deal successfully concluded by BOI within the last 3 years. In 2018, the bank raised the sum of US$750 million (Arranged by African Export-Import Bank “Afreximbank”) which has been fully repaid, and in March this year concluded a 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, 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. We are pleased to report that 28 international financial institutions and funds participated in this transaction, which was initially launched at US$750m, but upsized to US$1bn due to over-subscription.
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 a 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, who 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 and his Committee of Governors supported BOI by providing a full guarantee for the facility and a 100% currency swap to mitigate the foreign exchange rate risk.
The facility will be disbursed in Naira at single-digit interest rates to borrowers with bankable projects. Between 2015 and October 2020, the Bank of Industry with the support of its various stakeholders disbursed over 945 billion to 3,013,087 enterprises, thus creating over 6.87 million estimated direct and indirect jobs.
With the successful conclusion of this deal, the Board and management of 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 and especially in light of the planned commencement of the African Continental Free Trade Agreement (AfCFTA) in January 2021.