Narrative
Full Description
Project narrative
In February 2016, Sociedade Nacional de Combustiveis de Angola (Sonangol) — Angola's state-owned oil company — signed a $1 billion syndicated pre-export term facility (loan) agreement with 10 banks for general corporate purposes. Members of the syndicate included Bank of China, ICBC, Natixis, Standard Chartered, Standard Bank, Banco Angolano de Investimentos (BAI), China Minsheng Banking, Commerzbank, Intesa Sanpaolo, and Sumitomo Mitsui Banking Corporation. The loan carries a 5-year maturity and an interest rate of 6-month LIBOR plus a 3.35% margin. The loan was secured by (i.e. collateralized against) Sonangol’s receivables from exports of oil to China.
Staff comments
1. AidData has estimated the all-in interest rate by adding 3.35% to average 6-month LIBOR in February 2016 (0.0.86976%). 2. A pre-export finance (PXF) facility an arrangement in which a commodity (e.g. oil) producer gets up-front cash from a customer in return for a promise to repay the customer with that commodity (possibly at a discount) in the future. PXF funds may be advanced by a lender or syndicate of lenders to a commodity producer to assist the company in meeting either its working capital needs (for example, to cover the purchase of raw materials and costs associated with processing, storage and transport) or its capital investment needs (for example, investment in plant and machinery and other elements of infrastructure). PXF facilities are usually secured by (1) an assignment of rights by the producer under an ‘offtake contract’ (i.e., a sale and purchase contract between the producer and a buyer of that producer of goods or commodities), and (2) a collection account charge over a bank account into which proceeds due to the producer from the buyer of the goods or commodities under the offtake contract are credited. There are two key documents in prepayment finance transactions: a contract providing for the advance payment by the offtaker to the producer for the purchase of goods/commodities (the 'Prepayment Contract'), and a loan agreement between a lender and the offtaker (the 'Offtaker Loan Agreement') under which the advance payment is financed. 3. The loan is also known as a receivables purchase agreement facility. 4. In August 2015, Sonangol appointed three senior banks -- Natixis, Standard Chartered and Standard Bank — to pre-fund the deal before the loan went into general syndication. Seven banks joined the three senior lenders in syndication. They were BAI, China Minsheng Banking, Commerzbank, Intesa Sanpaolo, and Sumitomo Mitsui Banking Corporation. Chinese banks reportedly ‘joined with large tickets.’ 5. The size of Bank of China’s contribution to the lending syndicate is unknown. For the time being, AidData assumes equal contributions across the 10 known members of the syndicate ($100 million).