APICORP leverages its preferred creditor status and becomes the first financial institution in the MENA region to launch an A/B loan program
Saudi Arabia – The Arab Petroleum Investments Corporation (APICORP), the region’s only energy-focused multilateral financial institution, has launched an A/B lending structure aimed at encouraging international debt financing in its member countries that have limited access to foreign currency debt.
The A/B loan structure, which was unanimously approved by APICORP’s General Assembly at its last meeting in Jeddah on April 24, makes APICORP the first financial institution in the MENA region to offer this type of loan, in line with its desire to support the energy sector in its least developed member countries and encourage private sector participation for a more sustainable energy ecosystem.
Leveraging its preferred creditor status, the Company will offer the entire loan to the borrowing entity in two tranches, A and B, inviting private sector commercial financial institutions to participate in the B loan through a participation. APICORP will lead the negotiations and administer the entire loan and will be the lender of record.
Commenting on the ad, Khalid Ali Al-Ruwaigh, Managing Director of APICORP, said: “The new A/B loan is an important addition to APICORP’s wide range of innovative financial solutions to support the sustainable development of the region’s energy sector. By launching this new facility, we can offer our least developed member countries the most diversified sources of financing possible to finance the sustainable transformation of their energy sector.
“The new facility offers distinct benefits for all parties. Notably, private sector B-loan participants will benefit from unique privileges and immunities granted to APICORP by its member countries in its Establishment Agreement, including transfer and convertibility risk mitigation and certain tax benefits. This will encourage greater mobilization of funding from financial institutions that otherwise would not have participated for risk considerations, making A/B loans a very effective tool to help APICORP achieve its sustainability agenda on a business basis, added Mr. Al-Ruwaigh.
Participants in A/B loans are generally financial and credit institutions that do not have Multilateral Development Bank (MDB) status, such as commercial banks and national development finance institutions.
It should be noted that APICORP launched the Infra Initiative in partnership with the Islamic Development Bank earlier this year, a $1 billion private sector-focused program that aims to finance strategic utility projects with a limited access to international financing and to address the low participation of the private sector in the financing of energy projects.
To note: Clifford Chance LLP advised APICORP on the legal and structural aspects of the A/B loan. Clifford Chance’s team was led by Qudeer Latif, a partner in the firm’s Dubai office.
The Arab Petroleum Investments Corporation (APICORP) is an energy-focused multilateral financial institution established in 1975 by the ten Arab oil-exporting countries. APCIORP’s mission is to support the sustainable development of the region’s energy sector and related industries through a range of financing and direct equity solutions, as well as research and advisory services. in terms of energy. APICORP applies best-practice ESG principles across all of its operations, with environmental and social projects representing 13% of its nearly US$4 billion loan portfolio that includes leading public and private sector partners in 25 countries . APICORP is also the only energy-focused financial institution in the MENA region rated “Aa2” by Moody’s, “AA” by Fitch and “AA-” by S&P.
View APICORP’s ESG Policy Framework here
For more information on APICORP, please visit: www.apicorp.org
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