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Bank results show muted trade finance market

Nigeria’s Access Bank has raised a US$158mn syndicated trade finance facility with 13 lenders, one of the largest transactions for a Nigerian bank following the foreign exchange challenges the country has recently faced.

The transaction was launched at the initiative of Access Bank UK, the London subsidiary of Access Bank, and was successfully disbursed on May 30, 2018.

The borrower originally sought US$100mn but took on another US$58mn after the facility was heavily oversubscribed.

The bookrunners and co-ordinators were Africa Trade Finance and Mashreq, which was also the agent on the deal.

The 13 lenders are: Access Bank UK, Commerzbank, London Forfaiting Company and Mashreq as mandated lead arrangers; Al Ahli Bank of Kuwait and British Arab Commercial Bank as lead arrangers; and BMCE Bank, Investec, Mauritius Commercial Bank and SBM Bank as arrangers. Participants were the National Bank of Ras Al Khaimah, Atlantic Forfaitierungs and Africa Trade Finance.

Clifford Chance and Aluko and Oyebode acted as legal counsel.

The tenor of the deal is one year with an option to roll over another year. The facility also allows for the increase of the loan amount after the first year, and the option to bring new lenders onboard.

Speaking to GTR, Christian Karam, director of Africa Trade Finance, says the commitments are a result of the “borrower’s strong performance” in an “environment which has been recovering and improving in Nigeria over the last 12 months”.

The deal comes on the back of years of dollar shortage in Nigeria after the global oil price crash, which resulted in some local banks being unable to promptly repay their outstanding debt with international lenders. This has, in turn, affected Nigerian banks’ ability to borrow.

But it seems that more international banks are looking to return to the country. Being the second major deal that Africa Trade Finance has arranged for a Nigerian tier-one bank within recent months, Karam says it “increases the appetite in the market”.

The company also co-ordinated a US$160mn syndicated trade finance facility for Nigeria’s United Bank for Africa (UBA), which was disbursed in December, and is involved in a third deal for a tier-one bank in the country, according to Karam.

He also expects that more banks will be interested in the Access Bank deal, given that the structure allows for new banks to join the syndicate next year. This, he says, gives potential new lenders time to gain confidence in the deal.

“I expect that new lenders who have not been ready to lend to Nigeria at the closing date of our facility will certainly be willing to join the existing syndicate at its rollover, which is provided for in the facility documentation,” he says.