• Deutsche Bank supports energy security in Germany with US$3bn ECA gas supply deal

Deutsche Bank is supporting the German government’s programme to secure short-term additional gas supplies for Germany and Europe as part of the response to the current energy security challenge

Together with another international bank, Deutsche Bank has been mandated to arrange a US$3bn financing package to back the purchase of a significant amount of gas over the next four years.

Under the plan, Swiss-based commodities trader Trafigura Group has committed to supplying the gas which will be bought by the contractual partner for Germany – Securing Energy for Europe (SEFE Group) – that was recently recapitalised by the German government.

As initial mandated lead arrangers, both banks have fully underwritten and financed the loan commitment, and then syndicated large parts to more than 25 banks. The issue was oversubscribed 1.6 times.

Following initial discussions with the Federal Ministry for Economic Affairs and Climate Protection held at the end of July, the deal team secured the financing for this strategic project in a very short time.

On 28 October 2022, the loan proceeds were transferred to Trafigura, allowing gas to be fed into the European gas network on 1 November, for the start of the peak demand period. Trafigura has said it will use existing quantities from its global gas and LNG portfolio to help secure gas supplies to SEFE.1 The agreement included a review of Trafigura’s environmental, social and governance (ESG) policies and performance.

Structure of the finance

The financing is partly secured by a federal guarantee within the framework of the so-called guarantees for untied financial loans (UFK guarantees).2 Untied Loan Guarantees are an integral part of the Federal Government's raw materials strategy and have been supporting German companies' access to raw materials abroad since the early 1960s. Under the UFK programme acting through the German export credit agency (ECA) Euler Hermes Aktiengesellschaft, the Federal Government guarantees 80% of the untied financial credit to Trafigura. It is the largest loan of this type that has ever been provided with an Untied Loan Guarantee.

“We are proud to be contributing to Europe’s energy security by supplying this significant volume of gas to Germany backed by our extensive portfolio and long-term US LNG contracts,” said Richard Holtum, Head of Gas and Power Trading for Trafigura.

“Structuring this transaction to help secure Germany’s gas supplies could not have been more timely this winter,” added Werner Schmidt, Global Head of Structured Trade & Export Finance at Deutsche Bank.

“In adding our agency services Deutsche Bank has committed our full Global Hausbank solution to support this critical transaction” concluded Jason Connery, Head of TAS, EMEA at Deutsche Bank.

Commenting on the partnership with Trafigura, Heinz-Josef Reuschenberg, Coverage Banker for Trafigura, concluded, “We’re delighted to be working with Trafigura as their Global Hausbank, to support the German government with a strategic energy solution.”


Sources

1 See trafigura.com
2 See agaportal.de