Best Trade Bank in Metals and Minerals: Natixis

Runner-up: ING
Commended: Garanti Bankasi
2007 Winner: ING

The Best Trade Bank in Metals award is always a closely fought contest between Natixis and ING. This year, Natixis snatched back the award that it won in 2005 and 2006, with Turkish bank Garanti Bankasi clinching a surprise third place.

Natixis, of course, is famed for its quarterly metals market reports (which it shares with TFR). It has enjoyed a good year in the sector, with record commodity prices underpinning the market and the credit crunch returning margins to levels more in line with the risks.

“We set-up a dedicated team for transactional business with metals traders three years ago and it has now grown significantly – 2007 was certainly a stellar year in this respect. We now have about 60 clients in this sector and it is one of the fastest growing business segments of the bank,” says Frederic Blanchi, Head of Metals Traders and Corporate, Commodity Finance, Natixis.

The last year has been characterised by big mergers, acquisitions and investments in the metals industry, not just in Russia but globally. This culminated, of course, in BHP Billiton’s £86bn bid for Rio Tinto. Indeed, recognising the strength of the mining industry in Australia, as well as the booming trade in natural resources between Australia and China, Natixis has established a desk in Sydney to complement its dedicated team in Paris. A New York desk will follow soon.

As a result, Natixis has been involved in a number of landmark, innovative deals during the past year, not least due to the improved flexibility that it has been able to offer in terms of the calculation of the borrowing base. Blanchi points to the $300m facility for Consorcio Minero (Cormin), for which Natixis acted as security agent.

“The transaction is a revolving borrowing-base facility backed by non-ferrous metals and concentrates inventory, as well as trade receivables, in Peru. For the first time, the facility includes advances to suppliers as eligible assets under the borrowing base. The transaction was successfully syndicated to a tight pool of six banks,” says Blanchi.

He also highlights a $325m Duferco deal: “Natixis was mandated lead arranger (MLA) and co-ordination agent. The facility was modelled as a hybrid structure with a syndicated borrowing base loan partly secured by pledges in inventories and assignments of receivables,” he says.

Mathieu Postel, Head of Metals and Mining Producers at Natixis, highlights a number of others. “There was a record $2bn, five-year facility in favour of Mechel Yakutugol, a Russian steel and mining producer, and the country’s largest producer of coal, for which Natixis was MLA and bookrunner.

“We did another innovative $400m, four-year, dividend-based deal in favour of System Capital Management (SCM), the private Ukrainian conglomerate and main shareholder of a large steel maker group, for which Natixis acted as MLA.”

Other big deals included a $500 million dividend-based deal with EN+, Rusal’s holding company, as well as a $2.3bn pre-export financing in favour of Rusal – completed despite very challenging market conditions, says Postel.

And Dominique Fraisse, Global Deputy Head, Commodity Finance at Natixis does not believe that the pace of deal-making will slow down. “Metals prices remain at high levels. We believe that the market will remain buoyant with many opportunities for large acquisition deals in the metals sector as well as for working capital needs for all players in the commodity chain,” he says.

However, the era of the jumbo syndication is over for the time being, he adds, although there is a club of metals-focused banks willing to provide the finance that many producers need to fulfil their ambitions. Natixis is now firmly established as one of the leaders of that pack.

“We started transactional business with metals traders three years ago and it has now grown significantly – 2007 was certainly a stellar year in this respect. We now have about 60 clients in this sector and it is one of the fastest growing business segments of the bank.”

Frederic Blanchi, Natixis