Commodity trader Trafigura in $600m perpetual bond sale

Listen to this article

00:00
00:00

Trafigura, one of the world’s biggest commodity traders, has raised $600m from the sale of perpetual bonds in Singapore.

The issue, which was increased in size because of strong demand from institutional investors and private banks, was priced at 6.875 per cent and will be used to bolster Trafigura’s financial position.

“We’re delighted to have successfully issued our third perpetual subordinated bond which allows us to further diversify our financing base and reinforce our balance sheet”, said Trafigura’s chief financial officer Christophe Salmon.

Under international accounting standards, perpetual bonds are treated as equity rather than debt because they do not have a maturity date.

After aggressively investing in fixed assets and infrastructure over the past four year, privately-owned Trafigura is now looking to reduce its leverage.

At the end of its financial year in September, the company’s adjusted net debt stood at $8.6bn – almost 1.5 times group equity. Trafigura wants to reduce that ratio this year and is pursuing a number of initiatives, including the sale of non-core assets and reduced capital expenditure.

“It is always valuable to meet with capital markets investors and we were very pleased to see that the level of understanding of Trafigura’s business model, consistent performance and credit history has progressed significantly in the investor community,” said Mr Salmon.

Joint bookrunners on the bond issue were ANZ, Bank of America Merrill Lynch, DBS Bank, and Deutsche Bank.

Earlier this month, Noble Group, the Hong Kong-based commodity trader, raised $750m from the sale of junk bonds, which were priced 8.75 per cent.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.