Trafigura Sees Better Rates for $4.28 Billion Credit Facility

  • Commodity trader renewing existing facility by end of March
  • Company to benefit from `flight to quality,' CFO Salmon says

Trafigura Group Pte Ltd. expects to obtain lower interest rates when the commodity trader renews its European revolving credit facility, according to Chief Financial Officer Christophe Salmon.

Trafigura expects the multi-currency $4.275 billion facility, started on Thursday, to close at the end of March, the company said in an e-mailed statement. The proceeds will be used to refinance the trading house’s $5.3 billion facility signed last March.

“We are benefiting from the flight to quality trend,” Salmon said in an interview, commenting on his expectations for lower rates. “We are seeking to renew at a similar order of magnitude, around $5 billion” as lower commodity prices offset higher volumes and storage, he said.

Commodity traders depend on credit lines to fund their operations transporting and storing resources from aluminum and oil to coal and zinc around the globe. While traders are profiting from a decline in prices and market volatility, access to finance is being put at risk by the wider slump in the natural resources sector. Trafigura doubled profit from its oil trading unit to a record $1.7 billion in 2015.

Top-tier traders are continuing to raise capital to finance their businesses even as commodity prices have fallen to their lowest level since at least 1991. In October, as commodity trader and metals miner Glencore Plc’s share price buckled under concerns about its debt load, Vitol Group, the world’s largest independent oil trader, raised a record $8 billion in loan facilities.

Credit Bookrunners

That same month, Trafigura won improved terms on a $2.2 billion loan refinancing deal, while smaller competitors Gunvor Group Ltd. and Mercuria Energy Group Ltd. marketed credit facilities totaling $2 billion.

Based in Singapore with major trading operations in Geneva, Trafigura said a bank meeting for its new European facility, consisting of 364-day and three-year tranches, will be held in London on Jan. 20. Lloyds Banking Group Plc, Societe Generale SA and UniCredit SpA are the bookrunners, while Rabobank, ING Bank and Royal Bank of Scotland Plc are non-active bookrunners and mandated lead arrangers.

— With assistance by Javier Blas

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