ATI & AFC support critical to a €577 million debt financing facility to Côte d’Ivoire’s Société Ivoirienne de Raffinage (SIR) – West Africa’s largest oil refinery

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As part of a comprehensive program of economic reforms, the government of Côte d’Ivoire is restructuring the debt of SIR, the country’s national oil refinery


SIR has an installed capacity of 3.8 million tonnes per annum of refining capacity and it is the largest oil refinery in West Africa – to date it sells 50-60% of production domestically and exports the balance to neighbouring countries. The company is considered a ‘best in class’ oil refinery with laudable fiscal management protocols.


The transaction highlights recent innovations in Africa’s debt market as well as the trend toward leveraging African institutions to source and manage long-term and competitively priced financing on some of Africa’s largest deals Côte d’Ivoire’s economy is one of the strongest in sub-Saharan Africa with an anticipated 2018 GDP growth of 7.6%. In recent years the country has prioritized a comprehensive program of economic reforms aimed at achieving a sustainable balance of payment position. One of the target areas in this reform agenda is the energy sector – a critical growth area for the country. In this transaction, the government has restructured the debt of Société Ivoirienne de Raffinage (SIR), the national oil refinery, with a €577 million debt financing facility.


The Facility is in place to help SIR repay historical obligations on crude supply, provide access to longer debt tenures and reduce the all-in interest rate on its stock of debt. The Facility included both a Euro-denominated tranche (with a nine-year maturity) and a West African CFA franc tranche (with a seven-year maturity). The financing will enable SIR to upgrade its plant and to align it to international environmental emissions standards with a view to business expansion.


To highlight the importance of this project, the International Monetary Fund’s June 2018 country review noted: “Directors…encouraged the timely resolution of the electricity arrears accumulated by the public sector and looked forward to the SIR debt restructuring.”

To support the government’s drive to manage the debt sustainably of this vital company, the Africa Finance Corporation (AFC), the Sole Mandated Lead Arranger, and Texel Finance Ltd (Texel), a London-headquartered specialist credit and political risk insurance broker, approached ATI to provide comprehensive credit risk insurance cover on the transaction.


The project brings together two African multilateral institutions partnering to provide a viable solution to arguably one of the most pressing challenges facing African governments: access to competitively priced and long-term infrastructure financing. This deal attracted a panel of African-based and international lenders proving that, if structured well, there is broad appetite for African debt. ATI’s insurance guarantees totalled approximately €255 million at the inception of the facility or around 44% of the outstanding facility.


QUOTE from Samaila Zubairu, President and CEO of AFC “Transactions like SIR are a core part of AFC’s mission of leveraging our status as a DFI multilateral financial institution with both public and private ownership and attract a wide range of private investors while also coordinating appropriate support from the public sector. We are therefore delighted with the part ATI and Texel played in providing insurance so as to broaden the pool of investors who could participate. We look forward to using the lessons learned on this transaction and leveraging the partnerships established to continue financing critical infrastructure on the continent.”


QUOTE from George Otieno, CEO of ATI “This transaction is yet another example of the importance of both private-public partnerships as well as African institutions working together with international counterparts to bring workable solutions that address Africa’s infrastructure gap. New estimates by the African Development Bank places Africa’s infrastructure needs at US$ 130 – 170 billion a year, with an annual financing gap of US$ 68 – 108 million. If Africa is to meet its economic and social targets under such constraints, the continent and its institutions will have to continue to innovate, work together and with international counterparts to bring effective solutions to the table.”

QUOTE from Andy Lennard, Chairman of Texel “We are thrilled that this transaction was executed as it clearly demonstrates that there is appetite in the financial services market for this type of transaction both from not only a risk but also a financing perspective. The input and knowledge of all participants to make this work is evident from the amount raised and the calibre of the lenders. We believe that this type of structure can be replicated with the insurance market helping to provide support to reduce the funding gap that exists between the amounts needed for infrastructure projects and the present deficit. We hope that it is the first of many such initiatives.”


About The African Trade Insurance Agency ATI was founded in 2001 by African States to cover the trade and investment risks of companies doing business in Africa. ATI provides Political Risk, Surety Bonds, Credit Insurance and Political Violence and Terrorism & Sabotage cover. As of YE 2017, ATI has supported USD35 billion in trade and investments across Africa in sectors such as agribusiness, energy, exports, housing, infrastructure manufacturing, mining and telecommunications. Since 2008, ATI has maintained an ‘A/Stable’ rating for Financial Strength and Counterparty Credit by Standard & Poor’s.


About AFC AFC, an investment grade multilateral finance institution was established in 2007 with an equity capital base of US$1billion, to be the catalyst for private sector-led infrastructure investment across Africa. With a current balance sheet size of approximately US$4.2 billion, AFC is the second highest investment grade rated multilateral financial institution in Africa with an A3/P2 (Stable outlook) rating from Moody’s Investors Service. AFC successfully raised US$750 million in 2015 and US$500 million in 2017; out of its Board-approved US$3 billion Global Medium Term Note (MTN) Programme. Both Eurobond issues were oversubscribed and attracted investors from Asia, Europe and the USA. AFC’s investment approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth. AFC invests in high quality infrastructure assets that provide essential services in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications. To date, the Corporation has invested approximately US$4 billion in projects within 28 countries across North, East, West and Southern Africa.

About The Texel Group The Texel Group was established in 1997 as a global Credit and Political Risk insurance broker with access to Lloyd’s of London, public and private insurers. Texel’s specialist credit and political risk teams in London, Singapore and New York focus on providing insurance solutions to aid its clients with their global trade, finance and investments. Texel’s teams have the ability to provide innovative solutions to mitigate diverse political and payment risks for its clients who include major development, investment and commercial banks, significant commodity traders and international corporate.


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