EGA agrees revolving credit facility tied to term of SOFR

United Arab Emirates: Emirates Global Aluminium, the largest industrial company in the United Arab Emirates outside of oil and gas, today announced that the company has entered into a revolving credit facility linked to the forward secured overnight rate.

SOFR is the emerging replacement for the London interbank offer rate in US dollars, which has been the global benchmark for lending for decades but has faced accusations of market manipulation.

The EGA transaction is one of the first syndicated corporate credit facilities to be agreed in the Middle East with the SOFR term as the benchmark price, using the Chicago Mercantile Exchange SOFR forward rate. The transaction helps establish a market practice for the use of Term SOFR in the region and by industrial companies worldwide.

SOFR provides a benchmark interest rate based on data from observable transactions, while LIBOR relied on information reported by a panel of selected banks.

EGA’s Chief Financial Officer, Zouhir Regragui, said: “EGA has opened up new financial avenues in the Middle East with this SOFR term facility, and it is an example of how to manage the global transition to this new benchmark. . The facility itself, like the one it replaces, will allow us to continue our strong and structured approach to managing our short-term working capital and liquidity position.

The new committed revolving credit facility provides EGA with access to $137.5 million, with an extended term of 12 months. Participating banks include Abu Dhabi Commercial Bank, Emirates NBD and Commercial Bank of Dubai.

In total, EGA continues to have $737.5 million of committed revolving credit facilities.