> Eventually, with the help of traders, the regional government of Kurdistan was shipping almost 600,000 barrels a day at the peak. Yet the Kurds were still short of money, so they again turned to the commodity traders. Would they lend the government some money in exchange for future oil shipments? Vitol, Trafigura, and Glencore—the world’s three top oil traders—together with the Russian oil company Rosneft and another, smaller trader, advanced the Kurdistan Regional Government as much as $3.5 billon.
Some traders enlisted the help of their banks to provide the money, but Glencore took the most unusual route: The trading house decided Kurdistan was too risky for its own money, so it turned to international investors for $500 million in cash, selling them an oil-backed bond that paid a high rate of interest. That note, in turn, would fund Glencore’s advances to the Kurds. Oilflow SPV 1 DAC was born. The investor presentation for the notes laid out their numerous risks, including civil wars and border disputes. Glencore declined to comment.
2 comments
[ 3.3 ms ] story [ 18.8 ms ] threadSome traders enlisted the help of their banks to provide the money, but Glencore took the most unusual route: The trading house decided Kurdistan was too risky for its own money, so it turned to international investors for $500 million in cash, selling them an oil-backed bond that paid a high rate of interest. That note, in turn, would fund Glencore’s advances to the Kurds. Oilflow SPV 1 DAC was born. The investor presentation for the notes laid out their numerous risks, including civil wars and border disputes. Glencore declined to comment.