Trafigura, the Singapore-based commodity trader, closed a nine month $1.2bn liquidity facility on Wednesday to manage the volatility in energy markets following Russia's invasion of Ukraine.
The euro and dollar credit line, which will be underwritten by Mizuho, Société Générale, SMBC, and UniCredit, was set up in only a few days, a spokesperson for the company confirmed. The banks will each underwrite $400m. CFO Christophe Salmon said he expected to expand it to $2bn "within a short period of time.”
Energy prices have soared since Russia invaded Ukraine, as many oil and gas companies halted purchases from Russian providers. Brent Crude oil had soared to $125 per barrel on Wednesday up from a low of around $25 per barrel in June 2020, and natural gas at nearly double its price at the beginning of the year.
While leveraged loan and bond markets have all but closed, short-term emergency facilities for companies exposed to energy markets could provide some deal flow for banks, GlobalCapital understands. "We're looking at several of these short-term emergency financings, like three plus three month deals," one loans banker in London said.
The liquidity facilities could mirror those signed by corporates between March and early July 2020 amid the first bouts of volatility caused by the Covid-19 pandemic.
"The facility was put in place in a matter of a few days, illustrating the strong support from our core banks," a spokesperson for Trafigura said. "Such very short execution time requires a deep understanding of our business model, financing policy and risk management framework which our core banks have developed over years."