Italy’s export credit agency has guaranteed a commercial bank loan worth US$500mn for Olam Food Ingredients (OFI), in a deal aimed at securing raw coffee supplies for Italian buyers.

OFI, a subsidiary of commodities giant Olam Group, will use its inaugural export credit agency (ECA)-backed financing for general corporate purposes.

SMBC and Citi are the two lenders on the dual-currency facility which comprises a five-year US$250mn tranche and a seven-year ¥37.38bn tranche (approximately US$250mn).

SMBC acts as mandated lead arranger (MLA), bookrunner, coordinator and facility agent, while Citi serves as MLA.

Italy’s ECA Sace is providing an 80% guarantee under its Push Strategy, which works to boost Italian goods and services exports by helping large foreign corporations tap medium to long-term loans.

A Sace spokesperson tells GTR the latest agreement is of “strategic importance” to the Italian economy and will ensure the country has a stable supply of soft commodities, not least coffee.

“OFI, with a presence in Italy of more than 20 years and a market share of 16%, will keep supplying Italian players with raw coffee, mitigating against potential future disruptions to the supply chain of one of the most strategic sectors of the Italian F&B [food and beverage] landscape,” they say say.

The financing will also contribute to the growth of Italian exports, and as part of the deal, Sace will facilitate “business matching initiatives” between OFI and Italian buyers and suppliers, the spokesperson adds.

The agreement follows a string of Sace-backed loans for major commodities traders of metals and fossil fuels such as Trafigura, Mercuria, Vitol and Gunvor, also signed under the ECA’s Push Strategy.

It also comes amid wider restructuring efforts within the Olam Group, which announced in 2020 that its cocoa, coffee, edible nuts, spices and dairy business would be spun off into OFI, a separate entity.

The plan had been to publicly list in March 2022, but the company’s ​​initial public offering (IPO) was delayed due to challenging market conditions brought on by the Ukraine crisis. This week, Olam said it is still planning to conduct an IPO on the London Stock Exchange and to finalise a demerger.

Olam Agri, which supplies animal feed, edible oils, rice and cotton and provides commodity finance services, was also established as part of the group’s wider restructuring.

In the past, Olam has typically tapped the commercial bank market for sizeable debt packages, including a US$5.2bn deal in 2021, which it said would drive its operational overhaul.

In 2020, in the initial months of the Covid-19 crisis, the firm secured US$176mn from development finance institutions to buy goods from smallholder farmers in Asia and Africa.