Sonangol scored a coup with its $1.5 billion syndicated loan, which few corporate borrowers in other regions, including western Europe, have yet to match.
The Angolan state-owned oil and gas company secured a full underwriting of its facility, launched at $1 billion in July, from France’s Calyon – something which, bar a couple of small acquisition deals, has been absent from the loan market across Europe, the Middle East and Africa this year.
Unlike the clubbed loans, rollovers and refinancings which have dominated deal flow in the beleaguered bank lending market this year, Sonangol’s facility is also a new money loan.
But the facility managed to attract strong support from lenders, with three banks joining during a senior syndication and 12 in the retail phase, leading to an oversubscription. After two months in the market, books on the deal closed on September 18, and the facility increased by $500 million.
Sonangol, which was created to manage the country’s oil resources the year after Angola’s independence in 1975, has been a regular visitor to the international loan market in the last decade, often tapping the market for yearly trade-related deals and to fund its capex needs. But despite being well known to its regular bank lenders, the strength of its relationships alone would not have been enough to secure fresh funding this year, with many previously popular borrowers in the Middle East, Europe and Russia failing to access the market.
Sonangol priced the deal competitively at a margin of 300bp over Libor, and opted for a three-year tenor instead of the longer maturities it had been able to obtain in the past. It has previously completed several seven-year facilities, and its loan last year paid 160bp.
“We felt that we had put together a number of elements that made us comfortable,” says Gilles Sayer, executive director and head of Africa and Asia for structured commodity finance at Calyon in London.
Syndication still was not as straightforward as in other years, as a result of banks’ lending capabilities remaining restricted and many having to cut their country limits. Instead of coming in as sub-underwriters, senior lenders Banco Espiritu Santo, BNP Paribas and Societe Generale committed with take-and-holds of $150 million.
The deal then went out to the wider market, with banks offered mandated lead arranger tickets of $100 million and lead arranger ones of $75 million. The facility took longer to close than initially projected, to allow as many banks as possible to commit. But Sonangol managed to pull off the big oversubscription.
“Sonangol has some strong relationships and a fantastic track record, which has been untainted even in difficult political times,” says Sayer.
The rarity value of the deal, as one of the very few out of Africa this year along with that for Ghana Cocoa Board, also benefited Sonangol.
Angola is poised to negotiate with the IMF for a $2 billion loan after last year’s fall in commodity prices took its toll on its oil-dependent economy. Sonangol’s role as the state oil company makes it vital to the future of the country.