Monumental deal for Nigerian telecomms

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MLAs: Standard Bank
Borrower: MTN Nigeria
Amount: $3 billion
Tenor: 7 years


EKN, EDC, AB Svensk Exportkredit and KfW IPEX-Bank
Legal Advisors: Baker & McKenzie, Norton Rose LLP London and Aluko & Oyebode
Exporters: MTN Nigeria

This award-winning deal highlights Africa’s ability to attract investment and attention at a multitude of levels. Attaining $3 billion in financing alongside 17 Nigerian banks, export credit agencies (ECAs), development banks and Chinese financial institutions, the loan will enable MTN Nigeria to further expand, modernise and improve its telecommunications and infrastructure network. It is also the largest financing to date, encompassed by MTN Nigeria.

Signed on April 23rd last year and closing on 13th May, the funding ration is split approximately between 70% in naira denominations from the consortium of Nigerian lenders, while the remaining 30% will be US dollar-denominated from the other foreign institutions, which includes the export credit-backed facilities from China and Europe.

Naira-denominated commitments came from Access Bank, Citibank Nigeria, Diamond Bank, Ecobank Nigeria, Fidelity Bank, First Bank of Nigeria, First City Monument Bank, FSDH Merchant Bank, Guaranty Trust Bank, Keystone Bank, Mainstream Bank, Rand Merchant Bank Nigeria, Stanbic IBTC Bank, Standard Chartered Bank Nigeria, Union Bank of Nigeria, United Bank for Africa and Zenith Bank.

The international lenders included a commercial facility from Export Development Canada, FirstRand Bank and Nedbank. Germany’s KfW IPEX-Bank was backed by EKN and SEK, while a Sinosure-backed facility was provided by ICBC, China Development Bank and China Construction Bank.

The EKN and SEK-covered facility was particularly attractive to MTN Nigeria as it provided a significant funding amount of $300 million at competitive interest rates. It incorporates a structured mixture of fixed and floating rate tranches, offering MTN Nigeria maximum interest rate flexibility.

This is the largest-ever naira-denominated syndication facility in Nigeria and with the transactions closing in merely four months it proves that an ECA-backed transaction need not be any more timeconsuming than a vanilla trade term loan.

ECA-backed finance in emerging markets will continue to play an integral role in future transactions, and with 2014 slated to be Africa’s year, deals like this are only the beginning.