Baker McKenzie advised Bank One Limited ("Bank One") as arranger and swap provider on the first tranche of a USD 58 million USD/local currency swap (with up to USD 100 million greenshoe option) with an East African central bank (the "Central Bank"). Under the terms of the transaction documents, the swap is collateralised by local government bonds held with a local custodian bank, which are returned to the Central Bank upon the termination of the swap. The documents are structured for potential repeat transactions on a syndicated basis and as such effectively create a USD / local currency swap programme which the Central Bank can use to meet its USD funding needs on an ongoing basis.
The transaction also benefits from a payment insurance policy provided by the African Trade Insurance Agency, a pan-African financial institution providing credit and political risk insurance products to support African investments.
The Baker McKenzie team in South Africa was led by Banking & Finance Partner Lodewyk Meyer, with Partner Matthew Dening supported by Counsel Phung Pham and Senior Associate James Tanner in London. The Baker McKenzie team assisted Bank One on a similar African transaction in December 2019 ( see press release ).
Partner Lodewyk Meyer commented: "We were pleased to be able to assist Bank One and the Central Bank on this transaction, in particular given that it was both launched and closed after the impacts of the COVID-19 pandemic were being felt globally. We and Bank One look forward to providing similar assistance to other central banks in Africa with funding requirements which we anticipate arising as governments implement measures to address the pandemic."
Headquartered in Port Louis, Mauritius, Bank One is a universal bank offering consumer, corporate, private and international banking products to its clients. Its shareholders CIEL Finance Limited and I&M Holdings PLC own sizeable banking operations in Madagascar, Kenya, Tanzania and Rwanda, giving Bank One a tangible presence in Africa. Bank One has a niche focus on serving Sub Sahara African Financial Institutions and Central Banks.