Trafigura has agreed a six-month US$3bn contingent revolving credit facility to provide a liquidity buffer amid commodity price volatility, alongside a renewal of its European facilities totalling US$5.8bn.
The Singapore-headquartered trader announced on March 10 it had closed a number of “substantially oversubscribed” multi-currency European revolving credit facilities (RCFs) from a syndicate of over 50 lenders.
Its flagship European RCF was launched at US$4.5bn but closed slightly higher than last year’s facility after strong oversubscription.
It comprises a US$1.8bn one-year revolving credit facility, a US$3.5bn three-year facility, and a US$500mn five-year tranche for the first time.
Meanwhile, the new liquidity-focused facility, which was coordinated by Société Générale, has a six-month tenor, with two three-month extension options.
“This new facility… has been entered into to provide a liquidity buffer, if required during a period of heightened commodity price volatility,” Trafigura said.
Experts have warned that unpredictable commodity price changes are being largely driven by geopolitical uncertainty and fears over supply security, though the situation also presents opportunities for traders with ample access to liquidity.
Trafigura’s group CFO, Stephan Jansma, said the decision to sign a contingent liquidity facility “reflects our proactive and conservative approach to risk management” and “is a “testament to Trafigura’s scale, reach and preferential access to credit lines”.
“The group elected to structure this facility as a club deal with its relationship banks, following overwhelming interest and receiving US$8bn in underwriting commitments,” Jansma said.
He added the “successful refinancing of our flagship European revolving credit facility marks a major milestone for Trafigura” and that “strong interest from our banks in [the five-year] tranche reaffirms their confidence” in the company’s “longer-term prospects”.
The ERCF was arranged by a group of nine mandated lead arrangers and bookrunners, including Bank of China’s London branch, Rabobank, ING, Crédit Agricole , Société Générale, SMBC and UniCredit, as well as JP Morgan and UBS Switzerland as passive mandated lead arrangers. UniCredit also acted as global coordinator.
In addition, 44 financial institutions joined the ERCF during syndication, Trafigura said.
All the ERCF credit lines included two 365-day extension options, and the facilities will be used to “refinance the maturing 365-day facility and the existing three-year facility, which had been extended in previous years, as well as for general corporate purposes”, the company said.
Meanwhile, the liquidity facility had 12 mandated lead arrangers, including Abu Dhabi Commercial Bank, Santander’s London branch, Barclays, Crédit Agricole, First Abu Dhabi Bank, ING, Mizuho, MUFG, Société Générale, Standard Chartered, SMBC and UniCredit.
