South Africa’s Absa Bank, UK’s Standard Chartered Bank, and US-based Bank of America Merill Lynch have signed a $500 million (KSh51 billion) syndicated loan. It is the first syndicated loan Absa Bank has taken part in over a decade. A syndicated loan is whereby the loan is offered by a group of lenders to a company or a government.
The credit facility was launched on 29th May to select financial institutions. Absa‘s initial plan was to borrow $300 million but it increased the amount to $500 million after a strong response from the market. The loan product achieved more than 192 per cent oversubscription; an indication of Absa’s strong credit profile and the lender’s attractiveness to international investors.
The loan will charge 1.05 per cent interest per annum. Its repayment period is two years with a possible extension of one year if Absa Bank wishes to extend the maturity date.
The $500 million (KSh 51 billion) will be used for corporate purposes such as trading financing among other uses.
“The need for this syndicated loan is to fund the growth of our US dollar lending both in South Africa and our regional operations, in support of our group strategy,” said Jason Quinn, Financial director at Absa Group.
Absa Bank is one of the top financial institutions in South Africa and is a wholly owned subsidiary of the larger Absa Group. The lender offers diverse products and services including; retail banking, corporate banking, investment banking, and wealth management.