Mizuho US$100m Radiant World credit linked to disputed Glencore invoices

Mizuho Bank provided about US$100m of credit to Singapore iron ore trader Radiant World in June against invoices purportedly relating to sales to Glencore, only for the commodities group subsequently to tell the Japanese lender that it did not recognise the invoices.

The previously undisclosed financing was reported by Reuters on Friday, based on correspondence it reviewed and a source with direct knowledge of the transaction.

The disclosure provides one of the clearest examples yet of the financing exposure created by questions surrounding Radiant’s trading documentation.

For a receivables or commodity financier, confirmation that the underlying debtor recognises a payment obligation is fundamental to establishing whether an invoice represents financeable collateral. A dispute over the existence or validity of that receivable can therefore affect both expected repayment and the value attributed to the lender’s security.

Reuters did not report that Mizuho had crystallised a US$100m loss, written down the entire financing or established that fraud had occurred. Mizuho declined to comment.

Glencore told Mizuho in early August that it did not recognise the invoices, according to the documents. The commodities group had previously disclosed that it had taken a provision against its Radiant exposure and said on Friday that it had stopped doing business with the trader and exited its obligations.

Radiant has rejected allegations that it supplied invalid invoices to obtain funding. In a 31 July statement cited by Reuters, the company described those allegations as inaccurate and unsubstantiated and said it continued to operate normally. Singapore police have separately said they are investigating the company.

The risk chain also reaches trade credit insurance. Zurich and Allianz Trade have confirmed that they wrote policies covering transactions linked to Radiant, although both said they have no material exposure. Bloomberg reported that Zurich’s exposure is in the low double-digit millions of dollars and that no claim had been made.

For receivables and trade financiers, the case reinforces the distinction between verifying a document and independently verifying the debtor obligation behind it. The newly disclosed Mizuho exposure turns that control question into a concrete US$100m financing issue.