Global commodity trader Trafigura has refinanced and extended revolving credit facilities (RCFs) worth US$5.5bn, and structured the deals as sustainability-linked loans for the very first time.

The loan structure comprises a new 365-day European multi-currency syndicated RCF worth US$1.85bn, with proceeds being used to refinance a maturing US$1.9bn facility and for general corporates purposes. The deal was “substantially oversubscribed”, having been initially launched at US$1.5bn.

In a separate facility, Trafigura exercised an option to extend its 2018 three-year European RCF for another 365 days, while also increasing the tranche to US$3.65bn.

The commodity trader notes in a statement that the facilities were “well received by the bank market, partly due to the company’s record performance in 2020”.

“We have successfully refinanced Trafigura’s one-year flagship credit facility despite high volatility and economic uncertainty throughout the syndication period,” says Christophe Salmon, group chief financial officer.

“The ERCF [European RCF] is a key pillar of Trafigura’s financial model, which is designed to give us sustained access to liquidity and capital, including during periods of extreme volatility in the global economy,” he adds.

Like other major commodity traders, Trafigura profited from the volatility in oil and commodity markets last year, with the company generating record gross profits of US$6.8bn in 2020 on the back of the performance of oil as well as minerals and metals – its two main trading divisions.

Having published its first ever emissions reduction target in a responsibility report in January, which will see the commodity trader work to cut its own direct and indirect emissions by 30% in the next three years, the RCFs mark the first time Trafigura has inked a sustainability-linked loan structure.

Speaking to GTR about the facilities last month, Laurent Christophe, Trafigura group treasurer, said that the financing terms would be linked to three overarching key performance indicators (KPIs) of the company’s operations: a reduction of greenhouse gas emissions; growth of the renewable energy portfolio; and bringing sourcing of metals in line with those outlined by ISO 20400 – an international standard for sustainable procurement.

Trafigura will either gain discounted rates if it meets its KPIs, or face penalties if it fails to keep pace. A third-party firm – ERM CVS – will be tasked with assessing whether the trader is hitting its goals.

A total of 35 financial institutions joined the 365-day European RCF, with the Bank of China, ING, Société Générale and UniCredit acting as active mandated lead arrangers (MLAs) and bookrunners. Rabobank served as passive MLA and bookrunner, meanwhile Natixis and UniCredit acted as sustainability coordinators.