EGA secures an access to $137.5 million of revolving credit facility based on Term SOFR, emerging alternative to LIBOR

According to a recent report, Emirates Global Aluminium, the largest industrial company outside oil and gas in the UAE, has agreed to a revolving credit facility tied to the Term Secured Overnight Funding Rate (SOFR).It will provide EGA an access to $137.5 million, with a term extended by 12 months.

SOFR is a benchmark interest for dollar-denominated derivatives and loans that replace the London interbank offered rate (LIBOR).

EGA is one of the first in the Middle East to agree to conduct transactions through syndicated corporate credit facilities in accordance with Term SOFR as the benchmark pricing, using the Chicago Mercantile Exchange SOFR forward rate.

SOFR offers a benchmark interest rate based on data from observable transactions, while LIBOR relies on disclosures from selected banks.

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

In total, EGA continues to have $737.5 million of committed revolving credit facilities. Participating banks for Term SOFR include Abu Dhabi Commercial Bank, Emirates NBD, and Commercial Bank of Dubai.