Dedicated Commercial Paper Sales

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Debt Funding on the African Continent
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Debt Funding on the African Continent

• Raising Debt in Africa is challenging
• Developments are encouraging and promoting both
  capital market and bank funding initiatives
• Resulting in Borrowers successfully accessing
  these markets

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Citigroup in Africa

• Headquarters for the Sub-Saharan Africa Region
  are in Johannesburg
• Professionals covering 37 countries in the region
  
• Network of representative offices, branches and
  subsidiaries
• Over 1,000 professionals on the ground
• More than 40 years experience in Africa

• Loan Structuring and Syndication
• Fixed Income and Capital Markets
• Project Finance
• Structured Trade Finance

• Asset Finance
• Securitisation
• Capital Structuring

• Mergers and Acquisitions

• Initial Public Offering
• Private Placement
• Convertibles

Saharan
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Key Issues and Challenges
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Recent Positive Capital Market Developments

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Recent Rating and Credit Developments
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Debt Financing Alternatives
DEBT FINANCING ALTERNATIVES
Sources of Debt
BOND MARKET
LOAN MARKET
EQUIPMENT SUPPLIER CREDIT
Types of Debt
Non Enhanced Loan
Agency Supported Loan
Agency Supported Structured Bond
Non Enhanced Issuance
Agencies guarantee/insurance
Types of Currency
Local Currency Loan
Foreign Currency Loan
Local Currency Bond
Foreign Currency Bond
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Debt Financing Alternatives

• SOME FACTORS THAT HAVE TO BE TAKEN INTO ACCOUNT
  WHEN CHOOSING THE APPROPRIATE FORM OF DEBT
  FINANCING
• Local Legal Lending Limit (LLL)
• Bond issuance can circumvent legal limit
  constraint
• Pricing
• Bank lending rate vs. cost of bond issuance
• Local currency vs. foreign currency interest
  rate
• Local market liquidity
• Availability of investors/borrowers banks,
  institutional investor,
• and private investors
• Tenor
• Bond market might achieve a longer tenor

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Debt Financing Alternatives

• Local funding options are more widely available
  by utilising local capital markets
• Interest rate differentials between many emerging
  market currencies and USD/Euro has disappeared
• Increase visibility
• Pricing
• Tenor
• Yield Curve restrictions
• Understanding the Credit

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Case Studies - MTN Cameroon
MTN Cameroon Limited

Total Euro 93.5 million Term Loan Facility

International Amortising Senior Debt Facility
(IASDF)

Euro 58.5 million

Domestic Amortising Senior D
ebt Facility (DASDF) Euro 35 million


Borrower

MTN Cameroon Limited

Sponsor

MTN Holdings

Deal Size

IASDF Euro 58.5mm and

DASDF Euro 35mm

Maturity

IASDF

December 31, 2006

DASDF
December 31, 2005

(1 year extension
n option)

Purpose

Financing of Ericsson equipment for the roll
-
out of the network and
working capital requirements

IASDF ECA Cover

Exportreditnamnden (EKN, the Swedish
governments Export Credit
Agency) cover
-

50 comprehensive and a further 100 P
RI

DASDF DFI Cover

African

Development Bank (ADB) and FMO

guarantee for 75 of the
principal amount.

Guarantee

Make
-
whole guarantee for all parties from Sponsor
until project reaches
financial maturity

Signing Date

October 4, 2001

Citigroup Roles

Joi
nt Financial Advisor with

Standard
Bank London,

Global
Coordinator, Joint Lead


Arranger, EKN Agent, Inter creditor and Facility
Agent.
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Case Studies - MTN Cameroon

• Key features and Innovations
• First and largest Project Finance deal done in
  Cameroon
• Local currency facility maximised to provide a
  natural currency hedge given MTNs predominantly
  local currency revenues
• 75 of local facility guaranteed by ADB and FMO
  (a first)
• EKN provided 100 PRI and 50 commercial cover to
  international lenders (a first)
• Transaction Highlights
• Sponsor among the key players in the African
  market
• Finance Parties share a fully comprehensive
  security package
• Market Reaction
• Domestic facility syndicated to Cameroonian and
  Gabonese banks with significant oversubscription
• ADB and FMO guarantee highly regarded as AAA
  rating
• DASDF structured around Central Bank requirements
  to increase attractiveness to CFA lenders
• Banks accepted the make-whole guarantee falling
  away prior to the final maturity

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Case Studies - MTN Nigeria
MTN Nigeria Communications Limited, Nigeria

US 395 million Senior Secured Term Facilities


Borrower
MTN Nigeria Communications Limited

(MTNN)

Project Size
US 800 million

Deal Size

US 395 million

Sponsors
MTN International (76.5), Celtel

(16.8), MCI Limited (3.7), IFC (3.0)


Purpose
To provide additional funds to
finance network rollout.



NgN 31.13 billion (250 million equivalent) 3
-
year Local Facilit
y



40 million 3.25
-
year SCMB Facility (with ECICSA PRI)



35 million 6.25
-
year IFC A Loan



20 million 6.25
-
year DFI Facility (from FMO and DEG)



50 million 7
-
year IFC Standby Facility

Closing Date
November 4,2003

Citigroup Roles
Financial Advi
ser, Global Co
-
ordinator, Naira Facility Arranger, Common Agent,
Security


Trustee, Account Bank
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Case Studies MTN Nigeria

• Key features and Innovations
• Largest ever non-natural resources financing in
  sub-Saharan Africa  
• Short availability period, reduced funding risk
  on banks
• Co-lending by DEG and FMO, ECIC SA backed tranche
  - first time provided PRI only on a debt
  facility
• IFC A loan, US50 million IFC standby facility,
  to mitigate refinancing risk on the Naira
  facility
•  
• Key Structuring Benefits
• Note issuance facility tapped local demand for
  commercial paper
• Backstop in hard currency commitment
• Liquidity risk only not a guarantee
• Rollover mechanism pre-agreed at year 3 and 5,
  first-right of refusal mechanism with
  underwriters
• Resulting IFC loan would be termed out, and
  parallel long tenor commitments gave structural
  comfort
• Transaction Highlights
• Financing followed implementation of a 170
  million one-year bridge loan put in place by
  Citigroup and
• Standard Bank London in January 2002, which was
  extended by twelve months in January 2003
• Market Reaction
• Marketed to the seven Nigerian banks providing
  the bridge loan and about 13 selected additional
  banks,

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Case Studies MTN Nigeria (SUNIF Structure)

• Introduced by Citibank Nigeria following the
  collapse of the bond market
• Facilitated the need for Issuers long term
  funding requirements with Investors desire
• for short term Money Market Instruments
• Allowed for transfer of risk off the balance
  sheet of Citibank Nigeria
• Benefits 
• Reconciles Investors short term needs with
  Borrowers long term finding requirements 
• Banks can manage their balance sheets 
• Costs less than a bond issue 
• Does not require registration with the SEC

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Case Studies - Safaricom




BACKGROUND



The project involved the first limited recourse
financing for Safaricom which is one of two
national cellular
operators in Kenya



Medium term financing was required in order to
repay a bridge loan provided by Siemens and to


purchase further equipment for the roll
-
out of the network


KEY ISSUES / SUCCESS
FACTORS





Consent or approval was
required from 3 Kenyan regulators


Capital Markets Authority
approval to issue the MTN

Nairobi Stock Exchange
approval to list the MTN



Communications Commission of Kenya
consent to take security over Safaricoms assets



Regulators were consulted early
in the process



Finance plan discussed in detail




Comments incorporated in the structure




All required regulatory approvals and consents
were obtained on time




Early involvement of regulators


Excellent relationship between regulators and
Citibank Kenya









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Case Studies - Safaricom

• Key Features and Innovations
• Largest and longest tenor ever for a
  non-government bond in Kenya
• One of the first examples of ECA cover for an
  exotic currency capital market issue
• Citibank provided a guarantee to the MTN holders
  back to back with ONDs cover
• Key Structuring Benefits
• Limited recourse to shareholders
• Minimise funding costs
• Provide flexibility to Safaricom
• Transaction Highlights
• Finance Plan Comprised
• Term Loan - Office National du Ducroire
  (OND)-backed Euro 25-35 million, 6-year bank
  loan
• Medium Term Note (MTN) - OND-backed KSh 4
  billion, 5-year medium term note
• Term Loan was provided by 4 international banks
• Amount of Term Loan finalised at Euro 25 million
  once bond issue completed
• Investors in the MTN received an irrevocable
  guarantee from Citibank, N.A. New York, for 75
  of their Safaricom risk, which will in turn be
  supported by OND on a back-to-back basis

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Case Studies Nestle Bond Ivory Coast

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Concluding Remarks

• Borrowing is challenging but possible
• Regulators , Investors, Governments and Bankers
  are promoting innovating solutions
• Enhancements
• Incentives
• Disclosure requirements
• Credit
• Based on these favourable developments borrowing
  should become more cost efficient, less risky,
  longer tenors and increased volumes

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Citigroup in Africa Selected Credentials
WEST AFRICA
2.5mn Revolving remittance Backed
transaction Arranger 2003
US15mn Secured pre-export Finance Arranger 2003
EAST AFRICA
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Citigroup in Africa Selected Credentials (Cont.)
SOUTH AFRICA
US250mn Gold Fields Term Loan Revolving
Credit Joint Arranger Bookrunner 2001
US130mn Iscor Revolving Credit Facility Joint
Arranger Bookrunner 2002
US600mn Anglogold Revolving Credit
Facility Joint Arranger 2002
ADDITIONAL COUNTRIES
US50mn Commercial Bank of Ethiopia 18 month
syndicated facility Sole Arranger 2003
US50mn Commercial Bank of Ethiopia 2 year
syndicated structured trade facility Sole
Arranger 1999
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Citigroup in Africa Contact List