Billionaire Dangote Leads Record Nigerian Syndicated Loan SurgeStephen Morris
Billionaire Aliko Dangote, Africa’s richest man, helped fuel a record surge in syndicated loans by Nigerian borrowers last year with a $3.3 billion facility.
The nation’s companies signed more than $13 billion of syndicated debt, four times the amount raised in 2012, according to data compiled by Bloomberg. Dangote Industries Ltd. got its loan from local and international banks to help fund construction of a $9 billion oil refinery and the company said it will borrow a further $2.2 billion.
Nigerian companies are borrowing to invest in an economy that grew 6.81 percent in the third quarter of 2013, the most since the last three months of 2012, the latest figures from the Abuja-based National Bureau of Statistics show. Gross domestic product will increase by 7 percent this year, according to economists polled by Bloomberg.
“Nigerian corporates are quite bullish about growth remaining strong for the medium term, and many of them have massive capital projects and that’s what’s been driving international loan growth to the country,” said Ronak Gadhia, a London-based Africa analyst at Exotix Ltd. “The overall size of the economy is attractive -- it is much easier for international banks to do one big deal in Nigeria than in say a place like Gabon.”
Citigroup Inc. has a “new strategic plan for sub-Saharan Africa,” with Nigeria among its top priorities, Jim Cowles, chief executive officer for Europe, the Middle East and Africa, told reporters yesterday. The third-largest U.S. lender plans to invest in Africa as it sees a pickup in mergers and acquisitions as well as debt and equity capital market transactions on the continent.
“People are no longer afraid of doing deals in Africa, or at least across certain parts of Africa, as general transparency and familiarity increase,” said Christopher Czarnocki, an attorney at White & Case LLP who focuses on bank lending in Africa and eastern Europe. “Nigeria has become too big a market for those banks and law firms which focus on the emerging market space to ignore.”
Oando Plc obtained $800 million of loans this month to fund the purchase of Nigerian oil assets from ConocoPhillips. The loan included a $350 million portion provided by local banks and a $450 million piece syndicated to international lenders, including Standard Bank Group Ltd, BNP Paribas SA and Standard Chartered Plc, according to a Jan. 31 statement from the company.
Nigeria’s borrowers must withstand a sell-off of emerging-market currencies that’s led the country’s central bank to defend the naira. Last week the currency fell to the lowest level since Bloomberg started compiling data in 1999.
“Loans are very flexible instruments and the market tends to remain open during times of stress, and offers borrowers that have established relationships with banks the opportunity to have a conversation about their funding requirements,” according to Clare Dawson, managing director of the London-based Loan Market Association, a trade body for the industry.