June 2019

The competition for the annual TXF Deals of the Year - dubbed the Perfect 10 - results in two sets of awards for ten deals each: one across the commodity finance sector and the other across export finance. Each of those deals wins a specific category within those awards, such as “Asia Pacific Commodities Finance”, or Best Americas ECA Finance

Jonathan Bell, Editor in Chief at TXF explains, “This is an industry where practitioners help make the wheels of the world go around and is a true contribution to the real economy. Deals in this market create wealth, aid development, create jobs, boost economies and much more – they should all be celebrated.”

Deutsche Bank has four winning deals in the Commodities Finance competition and two in the Export finance one. Both teams stepped up to collect their awards at their respective annual awards ceremonies – commodities in Amsterdam on 23 May, export finance in Berlin on 12 June 2019.

These are:

Commodities

DB_Quingyun
Founder and President of Shandong Qingyuan Ma Zhi Qing with his team and deal participants from Deutsche Bank, ING and advising law firms step up for TXF’s Overall Commodities Finance Deal of the Year
  • European Commodities Finance Deal of The Year: Metinvest
  • Asia-Pacific Commodities Finance Deal of The Year: Hangzhou Zhencai Holding Group
  • Overall Commodities Finance Deal of The Year (the top award): Shandong Qingyuan
  • Energy Finance Deal of The Year: Neptune Energy

Further information on the commodity finance deals can be found in the flow article, ‘More firepower’, full details of the Metinvest case study are set out in the article ‘Nature of the Beast’, and a look at how reserve-based lending is transforming North Sea oil extraction forms the basis of the article ‘Sunset to sunrise’.

Commenting on the Metinvest deal, Deutsche Bank’s Vice Chair of Commodities John MacNamara observed, “ Ukraine’s largest ferrous sector producer and exporter has made a roaring return off the back of a very successful restructuring triggered by events beyond the company’s cotrol, which saw lenders not only getting repaid in full, but also voluntarily coming back for more.”

Turning to Hangzhou Zhengcai, a Chinese manufacturer of non-ferrous metal products and part of the Hangzhou Jinjian Group, this was a debut tapping of the internal debt market with an offshore prepayment facility. Frank Wu, Head of Structured Commodity Trade Finance Asia Pacific at Deutsche Bank explained, “The deal generates working capital for the smelting of alumina to finished aluminium, which is further along the asset conversion cycle than the previous two onshore deals, qualifying for the foreign debt quota. This is attractive to a wider range of participants.”

China’s Shandong Qingyuan, a producer of specialist refined oil based in Zibo that imports crude oil, scooped the overall best commodities finance prize, with founder and President Ma Zhi Qing bringing his team to Amsterdam to celebrate. He told flow how he first had the idea for the business more than 30 years ago in a rural area of Shandong once China had initiated its open-door policy. Form 1978 this altered China’s development strategy from one based on self-sufficiency to of active participation in global markets. The producer closed three off-shore pre-delivery financing facilities against future crude oil deliveries, totalling almost US$1bn.

The tightening of China’s outflow regulations from the State Administration of Foreign Exchange has made offshore financing a potentially cheaper option for deeper dollar liquidity – and a number of Chinese producers are turning to Western banks to help them access it.

Neptune Energy’s US$2bn reserve-based lending deal represented the largest RBL facility raise for an acquisition in the EMEA region, and also, noted TXF, “stands as one of the region’s largest private equity-backed deals”. Commenting, Yann Ropers, Head of London for Structured Commodity Trade Finance at RBL specialist at Deutsche Bank said, “This deal is an example of a European utility divesting from non-core oil and gas upstream businesses, and also another example of a private equity-backed company with oil ad gas knowledge successfully acquiring assets in the North Sea. This has been a recurrent trend in the oil and gas industry and so far it’s proved to be a successful business model.

Export Finance

TXF Petro Peru
Participants in the PetroPerú Talara Refinery Modernisation loan celebrate their win of TXF’s Best Americas ECA Deal of the year in Berlin
  • Best Americas ECA Finance Deal of The Year: Petroperú
  • Best European/Euroasian ECA Finance Deal of The Year: Lukoil Overseas Uzbekistan

Peru’s state-owned oil company PetroPerú closed a US$1.3bn financing backed by the Spanish export credit agency (ECA) CESCE to fund the expansion of its US$5.4bn oil refinery project in Talara. As explained by Carlos Linares, the company’s Corporate Finance Manager in an interview with TXF, “The new technology and increased refining capacity the expansion will bring will allow us to increase our margins and diversify the variety of final products that are delivered to the market.” The refinery upgrade is set to increase prouctin from 65,000 bbl/d to 95,000bbl/d while also improving the air quality in the local area. The project navigated four changes of government in both Peru and Spain to reach its close on 31 January 2018. The overall cost of the project is US$5.4bn with other elements of the financing taking the form of Latin American project bonds. Deutsche Bank was one of seven overall mandated lead arrangers and five facility agents.

In Uzbekistan, Russian oil and gas company Lukoil, via subsidiary Lukoil Overseas Uzbekistan, completed an 11-year US$660m loan on 20 April 2018 backed by South Korean ECA K-Sure to partially finance development of the Kandym gas processing plant in Uzbekistan. Deutsche Bank was one of three overall mandated lead arrangers and lenders each with an equal ticket size of US$220m. Lukoil is one of the largest publicly traded, vertically integrated oil and gas companies in the world accounting for more than 2% of the world’s production and around 1% of the proved hydrocarbon reserves.

Simon Sayer, Global Head, Structured Trade and Export Finance (pictured far left in awards photograph), said, “I am delighted for our clients Petro Peru and Lukoil to see their landmark transactions recognised in this way. We have been lucky enough to have deals voted among the Perfect 10s every year since the inception of the TXF awards, and these two awards are very worthy successors in that sequence..”

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