TXF commodity finance review 2015

Feature | 1 June 2016
Tagmydeals

 

This is a TFR executive summary of the Trade
& Export Finance
(TXF) Commodity Finance Market status 2015.

The report focuses
on commercial loans
for both commodity traders and commodity producers. It also leverages tagmydeals, TXF's user-generated, peer-reviewed deals database,
to present an overview of market transactions
for key commodities.

The following are key highlights of the report:

  • For the full year of 2015, banks provided a total of US$113.3bn worth of commodity financing for both commodity producers and commodity traders.

  • Commodity traders Glencore, Trafigura and commodity producer Rio Tinto were the largest single recipients of bank debt in 2015.

  • Traders received a total of US$73.6bn in revolving credit facilities last year compared to the US$40.3bn of revolving credit facilities (RCFs) signed in 2014.

  • 65% of this debt consisted of unsecured RCFs to traders.

  • Traders signed a total of 43 RCFs in 2015 - just five more deals than in 2014, but total volumes increased by more than US$32bn over the same period.

The report is divided into the following areas: general market, traders, producers and structured commodity finance.

General market

This section reviews commercial loans from banks, including secured and unsecured, for both commodity traders and commodity producers across the full year of 2015.

Highlights:

  • For the full year of 2015, banks provided a total of US$113.3bn worth of commodity financing for both commodity producers and commodity traders.

  • The bulk of this debt consisted of unsecured revolving credit facilities, comprising 65% of the market in 2015.

  • Oil and gas producers and traders were the largest recipient group for commercial bank loans in 2015 - receiving US$45.4bn in 2015.

 

 

 

 

Traders

Traders signed a total of 31 deals in 2015 - just eight fewer deals than in 2014, making total volumes decrease by more than US$1.3bn over the same period.

Commercial debt for traders continue to be in the form of revolving credit facilities. The majority of these facilities, US$16.3bn, were for traders in the oil and gas sector which accounted for 50% of all deals.

This was followed by US$6.4bn of loans for metal and mining traders which accounted for 20.1% of all facilities.

Highlights:

  • Traders signed a total of 31 deals in 2015 - just eight fewer deals than in 2014, making total volumes decrease by more than US$1.3bn over the same period.

  • Traders received a total of US$24.1bn in revolving credit facilities last year, compared to the US$23.7bn of RCFs signed in 2014.

  • The average tenor on deals for traders increased in 2015 from 1.76 years in 2104 to 2.01 years in 2015, while pricing jumped from 166 basis points (bp) over Libor to 211bp over the same period.

 

 

 

 

 

 

Producers

Commodity producers received a total of US$81.3bn of commercial bank loans with an average deal size of US$1.09bn. This is a remarkable increase of volume compared to 2014, where the overall volume for producers was just US$49.1bn.

The size of the loan suggests that banks are increasingly being sought to fund larger deals for producers while smaller loans are increasingly being funded by traders.

Both metals and mining, and oil and gas reached US$35bn in 2015, but we have witnessed an increase of more than three times of size in loans for metals and mining producers compared to 2014.

Highlights:

  • Most of the growth in 2015 came from new deals closed by producers, increasing the total volume by US$32.2b from 2014.

  • Commodity traders Glencore, Trafigura and commodity producer Rio Tinto were the largest single recipients of bank debt in 2015.

 

 

 

 

 

Structured commodity finance

Structured commodity financing comprises of several different financing structures: borrowing base, pre-export financing, reserve-based lending, and pre-payment facilities.

Highlights:

  • Total volume for structured commodity finance was US$28.6bn in 2015. This was a decrease of almost 20% compared to 2014. Secured financings represented only 25% of all commodity bank debt registered by tagmydeals.

  • Pre-export financings have lost a lot of traction in the market, almost halving the volume financed, whereas borrowing base facilities grew roughly the same in the opposite direction. Institutions are reacting pragmatically to all issues in the market (the China possible slowdown, the sanctions situation in Russia...) by demanding post-production more secured structures.

  • Looking across all commodity financing in 2015, secured financings represented only 25% of all debt as more and more bank loans were unsecured facilities to traders and a few, but significantly large, unsecured facilities to the biggest commodity producers.

 

 

 

 

For the full TXF Commodity Finance Market status H1 2015 report, see here: www.txfdata.com

"Total volume for structured commodity finance was US$28.6bn in 2015. A decrease of almost 20% compared to 2014"

"Banks provided a total of US$113.3bn worth of commodity financing in 2015"

Already registered? Login to access premium content

Give Feedback