Global commodities trader Trafigura has renewed its North American borrowing base facility amid a tumultuous time for the market, which has been rocked by the fallout from Covid-19.
Despite being oversubscribed, Trafigura opted to reduce the one-year facility from US$4.4bn to US$4bn because of a drop in financing needs due to the lower-priced commodities environment.
Acting as lead arrangers and joint bookrunners on the latest facility were MUFG, Natixis and Société Générale. MUFG also served as administrative agent.
Trafigura notes in a statement that the facility will go towards its existing energy trading, logistics and merchant activities in North America, as well as new activities such as power marketing and trading.
The firm adds that its operations in crude oil – the product Trafigura traded the highest volume of in 2019 – will be one area that benefits from the deal, with funding supporting its Eagle Ford and Permian basin supplies in Texas.
It will help maintain access to the Cactus II pipeline which runs across the state, while also supporting its storage, logistics and processing assets at its terminal in Corpus Christi, Texas.
According to Trafigura, it “has utilised its access to these assets to become the largest exporter of US crude”.
Crude oil prices have been hard hit globally in recent months, with coronavirus causing a sharp drop in demand in March, just as a price war between major producing countries forced an abundance in supply.
While an agreement was struck in early April between the likes of Russia and Saudi Arabia to limit the production of oil globally, the continuing impact of Covid-19 on demand caused prices for the benchmark US crude – West Texas Intermediate (WTI) – to briefly fall into negative territory for the first time ever a week later.
WTI and Brent Crude – the world’s two most popular oil benchmarks – have since rebounded to more than US$30 a barrel.
The latest facility follows Trafigura returning to the international syndicated bank loan markets in March, when it refinanced two deals that attracted new lenders.
One of these, a 365-day European multi-currency syndicated revolving credit facility, closed substantially oversubscribed at US$1.9bn, 27% above the launching amount of US$1.5bn.
The other saw Trafigura make its fifth appearance on the Japanese domestic syndicated bank loan market, with the raising of ¥76.8bn (approximately US$720mn) via a yen-denominated term facility, dubbed a samurai loan.