Commodities trader Trafigura has secured a US$1bn syndicated facility from a group of seven banks that will allow it to discount receivables on an off-balance sheet basis, the first time it has signed such a deal.
The uncommitted facility was oversubscribed and upsized from its initial launch amount of US$800mn following strong bank interest.
Trafigura claims the “innovative” structure of the deal is a first for the trader and the wider commodities trading market, with approved credit insurers backstopping the firm’s receivables and so allowing for off-balance sheet treatment.
“This is the first time a commodity trading company has successfully aligned the interests of financial institutions and insurers around a syndicated facility of this nature, allowing off-balance sheet treatment of receivables and prepayments,” says Stephan Jansma, Trafigura’s group CFO.
He says there was “strong collaboration” among financial institutions, insurance and legal counterparties.
Under the facility, credit risk will be transferred from the end buyer or producer to the insurance company, thereby enabling participating banks to discount Trafigura’s receivables on a limited recourse basis.
The structure will “optimise” the accounting treatment of insured receivables and prepayments “in accordance” with the EU’s Capital Requirements Regulations, Trafigura says.
There have been fears that changes made as part of so-called Basel 4, which came into effect in the EU on January 1, could dampen usage of credit insurance by banks, although changes to the rules are still under discussion.
A Trafigura spokesperson tells GTR that the deal’s structure will “support the banks in relation to Basel 4”, adding the facility will also help shorten the financing terms on its commodities transactions.
Natixis CIB acts as the document, facility and security agent, as well as sole active bookrunner and mandated lead arranger (MLA) on the deal, while First Abu Dhabi Bank, Mizuho Bank and MUFG serve as MLAs.
Lead arrangers are Abu Dhabi Commercial Bank and Nedbank, while Bank ABC is participating as an arranger. Insurance brokers Lockton and Guy Carpenter supported the structuring of the facility.
Trafigura frequently taps the bank market and in recent years has won ever greater financing commitments from global and regional lenders. In September, it raised US$3.2bn in term loans and a revolving credit facility from 38 banks across Asia and the Middle East.
The trader has also grown its use of export credit agencies and secured sizeable loans backed by state institutions in Europe, the Middle East and Asia. Such financing has been linked to imports of much-needed metals and energy goods, as well as exports.
