Gunvor launches $500m maiden bond Gunvor, the oil trading house, has launched its maiden bond, tapping the public capital market as it seeks to expand its business beyond trading, into assets such as refineries, thermal coal mines and oilfields. The Geneva-based company raised $500m with its five-year bond, up from an initial target of about $300m. The bond, which was significantly oversubscribed, will yield 5.87 per cent and will be listed on the Singapore Exchange, bankers said. The company, one of the world's top-five independent oil traders, told investors in a prospectus that it planned further investments in physical assets "all along the value chain that complement its trading business, have high growth potential and create recurrent, sustainable sources of supplementary income." The bond issue is the latest sign that the traditionally employee-owned commodity trading industry is opening to new sources of capital, as European banks scale back their lending activities in the sector just as traders need more credit. Gunvor becomes the third trading house to tap the bond market over the past year, following previous issuances from Trafigura and Louis Dreyfus Commodities. Gunvor publicly disclosed its profits in the prospectus, saying its net income fell in 2012 to $318.5m, down more than 3 per cent from $329.6m in 2011. The drop was in part due to an one-off payment to staff. The company said it made record profits of $621.2m in 2009, cashing in on unusual market conditions. "Increased competition has put pressure on trading margins," the company said in its prospectus, seen by the Financial Times. "Increasing price transparency has also meant that price dislocations in liquid markets happen more rarely or tend to be quickly arbitraged," the company said, suggesting fewer profit opportunities. "In reaction to that trend and in order to protect margins, an increasing number of commodities traders have sought to gain control of a larger portion of the value chain by investing in midstream and downstream physical assets," Gunvor said. Gunvor bought two refineries last year following the bankruptcy of Petroplus: the 100,000 barrels a day Ingolstadt refinery and its related German marketing activities and the 100,000 b/d Antwerp refinery. The company said the investment in refineries, storage and producing assets have allowed it "to enhance its control over the sourcing and distribution components of its trading platform, diversify its income streams and strengthen its competitive position." Gunvor has risen from being a niche player a decade ago to one of the world's largest independent oil trading companies. The company is co-owned by Gennady Timchenko, the Russian tycoon with longstanding links to Russian president Vladimir Putin and Swedish oil trader Torbjörn Törnqvist. Gunvor said on the prospectus that Mr Timchenko and Mr Törnqvist each own 50 per cent of the voting shares. Senior employees control 12.3 per cent of non-voting shares. Credit Suisse and Goldman Sachs were the joint lead managers for the issue.