Cover & spine - Trade Finance

DEALS OF THE YEARScoring an Angolan goalSonangol – pre-export financingMLAs: Crédit Agricole with Bank Espirito Santo International, BNP Paribas and Société Générale joining as seniormandated lead arrangers. Borrower: Sonangol. Amount: $1.5 billion. Tenor: 40 months. Lawyers: Lenders: Linklaters,Borrower: Norton Rose.This deal was impossible to ignore last year. The deal achieved a string of benchmarks,and was not only the largest loan in Africa last year but also the largest EMEAunderwriting in 2009. Crédit Agricole led a genuine syndication and startled themarket when it agreed to fully underwrite a $1 billion pre-export financing forAngolan state-oil producer Sonangol, a bold move when many syndications feel quietlyby the way side in this period and the syndications market was in near paralysis.Crédit Agricole was confident in both the structure and the appetite for thisfinancing. As Gilles Sayer, executive director, head of Asia and Africa, structuredcommodity finance at Crédit Agricole explains: “When the deal launched the marketwas still in shock from the financial crisis and the market was surprised by the bank’smove. But we are in the business of supporting our core customers and therefore whenSonangol knocked on our doors during the second quarter of 2009 we were ready tooffer them a solution. The deal was also an improvement from the point of view of thebanks with the reduced tenor and higher margin.”Margin on the deal was set at 300 basis points over Libor with a participation fee of150bp for banks contributing $150 million. Bank Espirito Santo International, BNPParibas and Société Générale joined the deal as senior mandated lead arrangers. Thedeal subsequently oversubscribed from its $1 billion launch amount with Sonangolagreeing to take the full amount. This deal was the fourth time that Sonangol has used afinancing based on the receivables purchase agreement. The deal was structured as anamortising receivables purchase facility which relied on an agreement betweenSonangol the producer and Sonangol Finance Limited, the borrower. Unlike atraditional pre-export model, which relies on just one identified offtaker over the termof the loan, lenders in the Sonangol deal received payment on the back of proceedsfrom a group of offtakers from the sale of crude oil deliveries every month.Proceeds from the sale were then fed into a collections account held at CréditAgricole in London to be distributed to the syndication of banks. The total debt wasdivided into 36 monthly repayments.Sayer adds: “It is still based on the sale of crude oil by Sonangol to quality offtakers asSonangol customer base is generally known. The customer wanted to deal with a singlebank and wanted fast delivery of the financing and didn’t want to discuss this with alarge number of banks. We decided form the beginning to follow exactly the samestructure as we didn’t want to waste time on reinventing a structure that worked. Thestructure used has been proven to work and we were satisfied with it.”In total 14 banks and one institution joined the facility representing a diverse group ofinvestors. The deal attracted 10 European, three Asian and two African banks, and attractedfive new lenders who had never previously participated in a Sonangol transaction. Thenumber of different banks and the size of the oversubscription reveal just how popular thisdeal really was. Crédit Agricole deserve credit for structuring a genuine syndicationsuccess story last year. ■26 TRADE FINANCE The Guide to Global Trade Finance Markets 2011