The Arab Investment and Export Credit Guarantee Corporation (Dhaman) has agreed to cover US$100mn in credit facilities provided to Trafigura by SMBC and Standard Chartered.
Standard Chartered served as the sole coordinator, structuring bank and agent for the loan, Dhaman says in a statement, while SMBC was a mandated lead arranger, according to the bank. The insurance contracts run for three years.
Dhaman says the funds will be used by Trafigura to support the export of goods from the organisation’s 21 Arab member states and the import of “strategic commodities”.
It says the cover is “trade finance insurance”, a product introduced several months ago, reflecting the corporation’s “commitment to continually enhance its product portfolio” to “keep pace with evolving customer needs”.
“These agreements reflect Dhaman’s strong commitment to supporting intra-Arab trade and enhancing the ability of financial institutions to fund trade flows amidst current global challenges,” says Rashed Ahmed Al-Haroun, director general of Dhaman.
“By providing advanced credit risk insurance coverage, we help facilitate the flow of strategic commodities into Arab markets and enable international partners to operate with greater confidence in the region.”
Kuwait-headquartered Dhaman serves in part as an export credit agency for the Arab world, and is over 50% owned by its member states, which include the majority of countries in the Mena region, according to its website. The remaining 41.61% is owned by “Arab financial institutions”.
“By leveraging Dhaman’s risk mitigation capabilities, we structured an efficient financing solution that adds real value to Trafigura’s business, enabling them to operate with greater confidence across complex markets,” says Edward Bullen, SMBC’s head of Emea export and development solutions, in comments posted on LinkedIn by the bank.
In recent years, Trafigura has closed a series of loans backed by export credit agencies, which help borrowers reduce financing costs by trimming the risk banks take on the deals.
In April, Trafigura secured a US$235mn loan from SMBC and the Commercial Bank of Dubai, with backing from the Abu Dhabi Exports Office, the UAE’s export finance institution. The funds supported Trafigura’s purchase of UAE-produced commodities, including energy, metals and minerals.
