DEAL: Trafigura’s non-recourse commodity inventory funding programme

Author: Amélie Labbé | Published: 12 Dec 2017

A Singapore-based commodity trading company has diversified its sources of financing by becoming in November the first systematic issuer of notes backed by commodity inventories. Basel III rules, which have increased capital requirements for trade finance transactions, were a key driver of the deal, leading Trafigura to develop an innovative inventory securitisation framework to secure short-term funding.

The initial $470 million deal and associated programme was set up to replicate Trafigura’s trading business using a bankruptcy remote special purpose vehicle (SPV), Trafigura Commodities Funding (TCF).

According to White & Case partner Chris McGarry, who advised the issuer, most of the documents needed to be drafted from scratch to record the many unique features of TCF. Trafigura’s existing securitisation documentation dating back to 2004 (when the company started its original receivables programme) and Trafigura’s repo documentation provided reference for some of the boiler plate and mechanical provisions....