Shell agrees $10 billion loan in ‘innovative deal’ with 25 banks

Oil major Shell has signed a $10 billion revolving credit facility, which replaces Shell’s existing $8.84 billion revolving credit facility and is provided by a syndicate of 25 banks.

In anticipation of the cessation of the London Interbank Offered Rate (LIBOR), this is one of the world’s first credit facilities linked to the new Secured Overnight Financing Rate (SOFR), Shell said in a statement on Friday.

Also, in a first for Shell, the interest and fees paid on the facility will be linked to Shell’s progress towards reaching its short-term Net Carbon Footprint intensity target.

“We are delighted to support the transition to new benchmark interest rates with this, market leading, syndicated SOFR facility,” said Russell O’Brien, Group Treasurer at Shell.

“This is an innovative deal which also demonstrates Shell’s broad-based commitment to reducing the Net Carbon Footprint of the energy products we sell. We appreciate the strong support and commitment from our relationship banks.”

Shell has set an ambition to reduce the Net Carbon Footprint of the energy products it sells by around 50% by 2050 and by 20% by 2035 in step with society as it moves towards meeting the aims of the Paris Agreement. Shell has also set a three-year target to reduce its Net Carbon Footprint by 2% to 3% by 2021 as compared to 2016.

The $10 billion unsecured revolving credit facility consists of a five-year, $8 billion revolving credit facility, and a one-year, $2 billion facility. Each facility includes two one-year extension options at the discretion of each lender.

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