June 21, 2019 / 9:32 AM / a month ago

Commodity traders add to Ninja flow

* Loans: Bunge, Louis Dreyfus latest to tap Japanese liquidity

By Wakako Sato

TOKYO, June 21 (LPC) - Japanese banks are piling into rare Japan-targeted loans from commodity trading giants Bunge and Louis Dreyfus to diversify their international exposure, adding to a run of so-called Ninja loans.

New York-based global food and agriculture giant Bunge is raising a US$375m dual-currency five-year financing, while Netherlands-headquartered rival Louis Dreyfus is expected to increase its three-year yen-denominated loan from an original target of ¥30bn (US$277m).

Bunge’s Ninja loan and Louis Dreyfus’ Samurai deal provide diversification to both the borrowers and lenders. Ninja loans are deals syndicated in Japan for overseas borrowers in any currencies and include Samurai loans, which are distributed in Japan and denominated only in yen.

“We have had many deals from India and Indonesia lately, so we appreciate a little more variety like this,” said a banker at a Japanese regional bank, alluding to the strong flow of Samurai loans in recent months.

Appetite for deals from Indian credits has waned following a flurry of Samurai loans, mostly at maturities of seven years or more, as lenders have struggled with country limits. Top firms from the sub-Continent have raised US$2.65bn from Samurai loans in the last 18 months.

Borrowers from other geographies have fared better. In May, Canada’s largest pipeline operator Enbridge closed a ¥52.5bn (US$485m) three-year Samurai loan after one of the widest syndications for that type of deal. Enbridge cut the interest margin to 65bp over Libor from 70bp originally, but it was still attractive compared to similar domestic loans.

An army of 30 lenders participated in the deal, thanks to the credit quality of Enbridge, which is rated Baa2/BBB+/BBB+ (Moody’s/S&P/ Fitch). The Canadian sovereign is a Triple A credit.

“We expect more borrowers from different countries and sectors later this year,” said a banker at a Japanese mega bank.

RARITY VALUE AND COMPETITION

Yield-hungry Japanese lenders have also flocked to the loans from Bunge and Louis Dreyfus because they represent rare commodity sector borrowings in the country.

Singapore-based agribusiness group Olam International was the last borrower from the sector to tap Japanese liquidity with a ¥30bn loan in September. Olam’s borrowing attracted 15 Japanese lenders, building on its debut ¥25bn three-year Samurai loan in July 2017.

Olam’s 2018 Samurai followed close on the heels of Netherlands-based energy and commodities trader Vitol, which raised ¥60.8bn from 14 lenders in September. Earlier in March last year, Trafigura Beheer wrapped up a ¥72.64bn three-year Samurai loan from 19 lenders.

Trafigura’s Samurai was the largest such borrowing in 10 years, while Vitol’s deal marked its return to Japan after a five-year absence.

Bunge’s Ninja loan, denominated in US dollars and yen, has a wider pool of lenders whereas the Samurai for Louis Dreyfus will have a smaller universe given its denomination in yen.

New York-listed Bunge also has external ratings – the borrower is rated Baa3/BBB (Moody’s/S&P) – making it easier for lenders to evaluate the credit, although some bankers were concerned about the volatility associated with its business. The loan is split into US dollar and yen tranches, paying margins of around 120bp and 80bp over dollar and yen Libor, respectively.

In comparison, privately held Louis Dreyfus does not have a public credit rating, but has a longer history in Japan. The company is returning for a Samurai three years after completing a ¥12.5bn three-year loan in March 2016.

Regardless of how popular the latest loans are, they will add to the flow this year. Ninja loans have notched up a strong performance with volumes reaching US$3.668bn year-to-date, about half of the US$7.671bn recorded in 2018, according to LPC data. ( Reporting By Wakako Sato; Editing by Prakash Chakravarti and Chris Mangham)

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