Allen & Overy has advised a consortium of six banks on the purchase of USD470 million worth of senior variable funding notes issued by Trafigura Commodities Funding Pte Ltd (“TCF”), a non-recourse, stand-alone special purpose vehicle launched by Trafigura Pte Ltd (“Trafigura”), one of the world’s leading independent commodity trading and logistics companies.
The programme and the initial USD470 million note issuance is financed by the transfer of Trafigura owned crude oil and refined metals, located in storage warehouses in 12 jurisdictions across Europe, the Middle East and Asia-Pacific. TCF shall enter into futures contracts in connection with each purchase of commodities from Trafigura in order to hedge against a decrease in the market price of the underlying commodities.  The purchase of Trafigura commodities by TCF is financed by the proceeds of the senior variable funding notes issued privately to the investors and a subordinated loan provided by Trafigura, which will cover the basis risk between the cash price of the commodities and the price under the futures.
 
The Allen & Overy team, led by finance partner Tim Conduit and assisted by associate Renée McLennan, advised the investors (Oversea-Chinese Banking Corporation, Natixis, Westpac Banking Corporation, DBS Bank Ltd, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Mizuho Bank Europe N.V.Oversea-Chinese Banking Corporation, Natixis, Westpac Banking Corporation, DBS Bank Ltd, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Mizuho Bank Europe N.V while senior associate Daniel Birch provided specialist commodities and derivatives advice. 
 
In addition to advising the investors, A&O’s Corporate Trustee team, led by partner Luke Lewis, advised Natixis as Liquidation Agent and Collateral Agent, as well as Intertrust as Security Trustee.  Counsel Catherine Lang-Anderson was also on hand to provide specific commodities advice.
 
Partner Tim Conduit commented on the deal:
“This was a key transaction to be involved in and we consider it a pivotal moment for the industry as a whole.  The global commodities industry has been struggling to find a capital markets solution to supplement financing from banks and the establishment by Trafigura of a sustainable debt platform demonstrates that this is achievable.”