The Bank of Industry has announced a successful conclusion of a landmark $1 billion loan syndication transaction, in a bid to improve its capacity to support MSMEs in a transaction that is the third major international debt syndication deal successfully concluded by BOI within the last 3 years. It could be recalled that the Bank had in 2018 raised the sum of $750 million with the support of the African Export-Import Bank “Afreximbank”, this loan has been fully repaid. Add to that, the BoI in March 2020 pulled off another €1 billion loan deal (Lead Arranged by Afreximbank, Credit Suisse, Rand Merchant Bank and Sumitomo Mitsui Banking Corporation Europe Limited (SMBC)).
The success of the deal inspite of the present uncertainty occasioned by the Covid-19 pandemic could be attributed to factors such as the impressive credit ratings of the bank, its ISO certifications in both Quality Management Systems and Information Security, as well as its strong strategic partnership with domestic commercial banks, evident by the continuous provisions of credit enhancements and de-risking tools to BOI customers.
The Loan Syndication is the process of involving a group of lenders in funding various portions of a loan for a single borrower. Loan syndication most often occurs when a borrower requires an amount too large for a single lender to provide or when the loan is outside the scope of a lender’s risk exposure levels. In lieu of the aforementioned point, 28 international financial institutions and funds participated in this transaction, which was initially pegged at $750 million, and later upgraded to $1 billion due to over-subscription.
African Export-Import Bank, Credit Suisse, African Finance Corporation, Rand Merchant Bank and Sumitomo Mitsui Banking Corporation Europe Limited (SMBC) are Mandated Lead Arrangers and Bookrunners of the deal, while the Export-Import Bank of China is the mandated lead arranger.
The Central Bank of Nigeria supported BOI by providing a full guarantee for the facility and a 100% currency swap to mitigate the foreign exchange rate risk.
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.
Official statement from the Bank notes that “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 catalyse 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.”