Commodity trader Trafigura has secured a US$1.6bn debt package from banks across Asia Pacific and the Middle East, in a deal which saw the firm offer a Covid-19 premium rate to participating lenders.

The oversubscribed facilities were upsized from their initial launch amount of US$1bn, with 24 banks ultimately taking part in the transaction, which was divided into three tranches.

For the first, a 365-day revolving credit facility (RCF) worth US$730mn, SMBC and Standard Chartered acted as mandated lead arrangers (MLA) and bookrunners, while Standard Chartered also took on the role of global co-ordinator.

In another US-dollar denominated tranche, Trafigura secured a three-year US$278mn term loan, which saw the Development Bank of Japan act as MLA.

A total of 15 other financial institutions (FIs) joined these two US dollar tranches, although a spokesperson for Trafigura declined to comment on the names of the other lenders.

The third tranche is a one-year Chinese offshore spot (CNH)-denominated term loan facility worth US$590mn.

The Agriculture Bank of China and China Construction Bank were the MLAs and bookrunners on that tranche, with six other FIs also taking part.

The new facilities will be used to refinance a maturing three-year term loan tranche from 2017 and a maturing one-year US dollar and one-year CNH tranche from 2019, as well as for general corporate purposes.

A spokesperson for Trafigura confirmed that a Covid-19 premium rate has been used as part of the deal, although didn’t specify the amount.

They tell GTR: “It was introduced to compensate banks for [the] higher cost of funding, ie offsetting the impact of Covid-19 for lenders and normalising the return of banks in the Asian RCF should the pandemic not have occurred.”

Christophe Salmon, group CFO for Trafigura, says: “The closing amount, above last year’s level [US$1.5bn], is a strong vote of confidence in the quality of our credit and strength of our business.”

He adds: “We also benefited from a ‘flight-to-quality’ as Trafigura presents a safe-haven in turbulent times for banks active in the commodity trading sector. I was particularly pleased with another record level reached under the CNH tranche, which confirms Trafigura’s front-ranking position among commodity traders in the offshore renminbi centres and demonstrates the benefit of our financial diversification strategy.”