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CASE STUDY: Afreximbank Sees Tight Pricing on Dual-Currency Loan Despite Dollar Strength

African Export-Import Bank (Afreximbank) managed to secure a dual currency syndicated term loan at the lowest margins yet, despite a strengthening dollar and increasing emerging market volatility following the US elections.

Feb 28, 2017 // 5:43PM

Background

African Export-Import Bank (Afreximbank) sought a sum roughly equivalent to US$600mn in US dollars and euros, which would be put towards increased lending on trade finance deals and general corporate purposes.

The Bank sought to optimise its debt profile and diversify its sources of funding.

Transaction Breakdown

The facility was originally launched at US$600mn, with the general syndication strategy aimed at inviting US dollar commitments.

Fourteen banks joined the 12 initial mandated lead arrangers, which enabled the arrangers to tighten pricing on the facilities.

The final facility consisted of a US$316mn A1 tranche and €105mn B tranche, each carrying two year tenors and maturing in November 2018, and a US$445mn A2 tranche with a tenor of three years and maturing in November 2019.

Only the US dollar portion of the facility saw general syndication, which attracted participation from a number of large financial institutions based in the Middle East, Europe and the Asia-Pacific.

Lender appetite clearly favoured the longer end of the curve, with about 73% of the commitments raised during the general syndication stage going to the 3-year tranche.

The margins on both the two and three-year tranches, at 130bp and 150bp respectively, represent the lowest levels that Afreximbank has paid for a syndicated loan, the bank said.

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