Oil trader Gunvor extends sustainability loans despite virus
Energy trader Gunvor Group Ltd. Expands Its Sustainability Debt Portfolio Even As The Coronavirus Pandemic Undermines Demand For Petroleum Products.
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Gunvor accepted a one-year loan of 450 million euros ($ 505 million) with a consortium of banks to finance operations at its refinery in Ingolstadt, Germany. The ESG loan links lending rates to environmental, social and governance objectives.
The deal brings the Geneva-based trading house’s ESG loan portfolio to more than $ 1 billion after renewing a January Installation of $ 725 million for its two other European refineries.
“Despite recent market volatility and uncertainty, it is very promising to see such support from lenders for this approach, as the Ingolstadt facility has been heavily oversubscribed,” said Muriel Schwab, CFO of Gunvor.
Companies around the world continue to embrace sustainability-linked lending, tying interest rates to their ESG performance even as the coronavirus pandemic has wreaked havoc on the global economy. Global issuance of such loans for the first six months reached $ 51 billion, surpassing the $ 48 billion recorded for the same period last year, according to Bloomberg data.
Major commodity traders are increasingly turning to ESG lending for some of their critical financing needs and to strengthen their sustainability credentials with the help of banks who are also encouraging these companies to improve credit quality. of their loan portfolios. Loans grew six-fold in 2019 to $ 7.8 billion as crop traders Cofco International Ltd. and Louis Dreyfus Co. has obtained sustainable loans and now links most of its financing to ESG objectives.
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Lenders have welcomed these facilities even as liquidity tightened during the pandemic due to the added assurance of healthy and responsible business operations based on sustainability measures.
Gunvor’s facility was oversubscribed at € 520 million, but it decided to keep the deal size at € 450 million, a spokesperson said.
The new refinery loan comes as demand for petroleum products increased by up to 30% at the height of the pandemic, after countries told citizens to stay at home to avoid spreading the disease. As lockdowns ease, demand for gasoline in China and the United States is driving a nascent recovery while demand for many products, particularly jet fuel, remains subdued.
Scheduled maintenance at the 88,000 barrels per day Gunvor refinery in Rotterdam was postponed during the crisis. The refinery’s turnaround has now started on a small scale in accordance with government virus safety regulations, according to a Gunvor spokesperson, and the plant remains closed.