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JB's weekly round-up - 14 April 2014

The clocks have changed, the weather has brightened and tulips have started to bloom outside the gates of TXF Towers… A timely reminder that it is now three weeks until our Natural Resources and Commodities Finance Conference in Amsterdam.
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Spring is finally here!
The clocks have changed, the weather has brightened and tulips have started to bloom outside the gates of TXF Towers… A timely reminder that it is now three weeks until our Natural Resources and Commodities Finance Conference in Amsterdam. Like all TXF events, open and honest discussion will be the order of the day, and it looks like we will have a great mix of people in attendance. If you would like to get involved and have your say, book now.
 
Caracal Energy signs debut reserve based lending facility
Africa is all the rage for exploration companies at the present time. In a debut facility, Canada’s Africa-focused Caracal Energy has signed a $140 million reserve-based senior secured facility led by Natixis and Société Générale CIB acting as initial mandated lead arrangers and bookrunners. ING Bank has come in as mandated lead arranger.
 
The funds will be directed towards the company’s operations in Chad, through its subsidiary in the region.
 
The article has comments from Caracal’s chief financial officer in response to the company’s ground-breaking deal.
 
Tullow signs RCF – but not before increasing it
Another Africa-focused oil exploration company in the news last week is London-based Tullow Oil. The group refinanced its $500 million revolving credit facility (RCF) – successfully increasing the size by 50% to $750 million. The three-year loan replaces an earlier facility that was due to expire later this year. The investor relations crew at Tullow have been hard at work of late. The loan comes hard on the heels of a highly successful note issuance just a week earlier.
 
We list the participant banks and feedback from Tullow’s chief financial officer, Ian Springett, in the article here.
 
Shale – it’s all about the long-term offtake
Cheniere Energy of the US has signed two long-term liquefied natural gas (LNG) supply contracts with Italy’s Enel Group for 3 billion cubic metres of gas sourced from shale gas fields a year.

The agreement is significant both because long-term deals such as this are crucial to the successful financing of projects such as those being developed by Cheniere Energy, for example Sabine Pass, but also because it is a vote of confidence in the long-term value of shale.
 
The article has full details of the deal, including where Enel will be shipping the gas towards.
 
Regulation has a knock-on effect for traders
TXF hosted a live webinar with Doug Ziurys of FImetrix last week, who discussed the research firm’s most recent survey of commodity traders’ views on everything from regulation to finance.
 
There’s no doubt that regulation is one of the most pressing concerns for the industry, with more than a third of trading companies identifying it as a leading issue confronting them in the next 2-3 years. What is particularly interesting is that the biggest effect of regulation according to 57% of trading companies is that financing would become more difficult to arrange. This shows the knock-on effect of regulation – both on traders and on financial institutions – and underscores the importance for regulators of taking all implications of new regulation into account.
 
You can watch the webinar in full via TXF's OnDemand service here.
 
ECA-backed Höegh vessel arranged by banks
Acronyms have broken new boundaries in certain sectors of trade finance, but now have entered a new dimension in the energy/shipping sector – with FPSOs and FSRUs etc making more regular appearances. What are they? – read on…
Norwegian-owned, Bermuda-based shipping company Höegh LNG’s latest floating storage and regasification unit (FSRU) is underway after it secured export credit agency (ECA) backed funding totaling $309 million. The financing for the vessel, which will be built by South Korea’s Hyundai Heavy Industries, was jointly coordinated by Bank of Tokyo-Mitsubishi UFJ and Standard Chartered.
 
Have a read of the article to see which other banks were involved and who the vessel will be chartered to.
 
Nexi cover to go the extra mile for corporates
Japan’s Nippon Export and Investment Insurance (Nexi) will soon be able to provide cover capacity in most of the countries where Japanese corporates operate after signing a reinsurance agreement with Coface.
 
Under the Coface/Nexi reinsurance agreement, Nexi and Coface create a comprehensive cooperation scheme on short-term credit insurance available for transactions in 96 countries outside Japan. Have a look at the story for a vivid diagram explaining how the new cooperation agreement will work.
 
VimpelCom back on the bank line
Amsterdam-headquartered mobile telecoms company VimpelCom was back in the bank market last week securing facilities totaling $2.3 billion. The funds are split between an RCF of $1.8 billion and a $500 million term loan. The company, with its Russian/CIS roots is now, by all accounts, the sixth largest mobile network provider by subscribers in the world. Full details of the parties involved in the funding can be found in the news item.
 
On the move
There have been a few senior moves in the market this past week, starting with Henri D’Ambrieres, who has more than 25 years’ experience in structured finance. Henri will join Bpifrance as a consultant to spearhead a new initiative to support French exporters. The initiative follows a request from the French Ministry of Finance to create a direct lending activity for small export credits, mainly directed to SMEs. This will be a new business for Bpifrance, which is close to many French SMEs.
 
Karl Trumper has been appointed head of trade & working capital at Barclays. Trumper, who has been at the bank for more than 12 years, will report in his new role to Dan Roberts.
 
Meanwhile Wanda Felton was reconfirmed by the US Senate to serve another term as the first vice president and vice chair of the Export-Import Bank of the United States (US Ex-Im). Felton has been credited with strengthening US Ex-Im’s activities in emerging markets.
 
And over at the Multilateral Investment Guarantee Agency (MIGA), the political risk insurance and credit enhancement arm of the World Bank group, there were two senior appointments: Carlo Bongianni will head MIGA’s infrastructure team and Muhamet Bamba Fall will lead its Asia hub.
 
200 Motels
Lastly at Commerzbank, Harald Lipkau was replaced as head of financial institutions (FI) for Asia by Jörg Motel. Motel will lead his team in Frankfurt and Commerzbank’s 13 representative offices across Asia in the development of the bank’s FI offering, working with new and existing clients in China, the Indian subcontinent and the Association of South-East Asian Nations (ASEAN).
 
And finally…
It has always been the case that many structured commodity bankers (and traders) looked forward to a degree of disruption in particular markets in order to get back to more sensible pricing on loans and usually more commensurate with the inherent risks. But putting this into proper context, such thought/remarks from those bankers was also a response to the encroachment into their territory by capital market outfits or other cash-rich entities that had been driving down pricing as they aggressively forced their way into the market.

So, with serious issues now taking place in Ukraine, what will we see happen with lending into that particular market and in Russia? There has already been a major retreat by many institutions. This is a big issue, and one which we will be debating without pulling any punches with some of the main practitioners at our Natural Resources and Commodities Finance Conference in Amsterdam on 6-7 May.
 
Cheers
 
JB

Jonathan Bell
Editor-in-Chief
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