During the last couple of months we have heard several industry players to share the view that credit risk will be another challenge of the low-sulfur enforcement since the new regulation will increase the costs which could potentially hurt the liquidity position of many companies.
Further to this opinion, we saw two bunker fuel suppliers this week who reported that they have agreed the expansion of their financing facilities in an effort to meet the challenges of the IMO 2020.
Physical supplier Peninsula Petroleum announced that the company has increased the group’s financing facilities by USD 150 million to a total of more than USD 700 million. The additional funding of USD 150m refers to the European receivables financing facility (which increased by USD 100m) and group’s Singapore facilities (which increased by another USD 50m).
According to the company, the additional funding will support the group’s growth plans amid the higher prices expected due to the new IMO regulation. The group’s CEO, John A. Bassadone mentioned that “Peninsula’s transition into a global, integrated bunker supplier is more relevant than ever in the context of 2020 and the opportunities it brings for the group’s worldwide platform”.
In the meantime, Bunker Holding announced that it has entered into a new unsecured revolving credit facility of USD 1 billion with a syndicate of 12 banks. The company reported that this facility, which is one of the largest corporate facilities in the industry, will support Bunker Holding in its needs for higher flexibility due to the forthcoming IMO 2020 and will make it better prepared.
The group’s CFO, Michael Krabbe, concluded: “2020 heralds a paradigm shift to our industry in many ways and bunker companies need to be more financially robust, with a stronger credit-worthiness than ever before.