TXF Media Commences Commodity Traders Borrower Database

TXF recently completed their inaugural commodity finance market overview.

The report gives us a peek into two of the most common deal structures for commodity lenders – revolving credit facilities and Pre Export Financings (PXF). There are many variants of PXF finance, but typically these loans cover the purchase of raw materials and costs associated with processing, storage and transport or capital investment needs (for example, investment in plant and machinery and other elements of infrastructure).

Borrowers are typically primary producers – extraction companies, energy, soft commodities, etc. with relatively limited access to capital markets, Processors – refiners, mills, smelters etc. and Traders and holders of inventory. PXF loans are almost always repaid from future receivables (i.e. delivery of underlying product has not yet happened).

The TXF report registered 122 deals done in 2014, amounting to $105 trillion in bookings.   Trafigura, Vito and Uralchem were the most active traders according to the report, involved in over 25% of the financing total.

TXF overview - Revolving credit facilities

Energy and agricultural commodities accounted for three-quarters of the total, with independent energy traders Trafigura and Vitol leading the way. Trafigura's one-year facility saw its pricing drop to 95 BPS over Libor from 130 BPS, while Vitol's incorporated four new banks to bring the total to 55 – with both points illustrating the availability of financing for top tier traders in 2014. The average RCF was $1.1 billion, though there is a large gulf between the biggest ($17.34 billion) and smallest facility ($7.34 million) in 2014.

32 out of 41 deals were with unrated (ie, there was no S&P or Fitch rating)

The average pricing currently sits at 166 BPS over Libor, but what this doesn't reflect is a larger trend in the commodities market: cheap financing is available for the largest traders with track records, but increasingly expensive for small and mid-sized players.

TXF Overview - Pre export financings

TXF Data registered roughly half the number of pre-export finance facilities (PXFs) as RCFs in 2014 with the average deal size also being approximately $240 million smaller. The metals and mining sector, which only accounted for 11.1% of RCFs, was the most common PXF sectors accounting for 38.3% of that market.

The total amount of financing raised via PXFs was $18.4 billion.

TXF is hosting a Natural Resource and Commodity finance conference next week. To register, visit here

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