Arab Petroleum Investments Corporation (APICORP) has launched an A/B lending structure to encourage international debt financing in its member countries, with limited access to foreign currency debt.
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.
Khalid Ali Al-Ruwaigh, CEO 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 commercial basis,” he added.
Participants in A/B loans are generally financial and credit institutions, which do not have the status of multilateral development banks, such as commercial banks and national development financial institutions.
In addition, APICORP launched an 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 limited access to international financing and to address the weak participation of the private sector in energy financing. projects.
Read: Apicorp and IDB partner in $1 billion infrastructure financing initiative
In more recent developments, APICORP announced that Fitch Ratings has revised its long-term issuer default rating (IDR) outlook from stable to positive and affirmed the IDR at ‘AA’.
According to Fitch’s report, the main drivers of the outlook revision reflect “steady improvements in key solvency and liquidity measures over the past few years” and its expectation that this trend will continue. Notably, the report noted APICORP’s usable capital to risk-weighted assets (FRA) ratio of 52% and equity to adjusted assets of 32%, both of which are “well above thresholds”. excellent”. by 35% and 25%, respectively.