Structured Trade Finance

This is a term used to describe various financing techniques or even restructuring techniques i.e. any structure that isolates asset being financed from the originator and used to support the financing being raised as collateral/ source of disbursement.

Each structured Trade Finance deal is different from the other as each deal is tailored to meet individual customer needs. The facility is available to businesses that do not have strong balance sheets but have an underlying transaction that is self liquidating. Common structured trade finance deals include:-

Stock Financing Facility

This is available to producers who do not have access to balance sheet lending. Pre-requisite is to have all risk insurance and an assignment of proceeds. Producer obtains liquidity by leveraging his inventories well before the goods are sold onto the market

Warehouse Finance Facility

Facility enables the borrower to purchase raw materials for processing, grading, packing and export. There is ready market for such goods.

 

Structured Pre-shipment Finance

Client receives funds to purchase inputs for the production process. Facility is secured by the receivables accruing based on firm export contracts backed by LC, CAD, and Insurance.

Back to Back Letter of Credit

Provided a customer who is a beneficiary of a Letter of Credit (Master LC) and willing to offer the same as security for establishment of another LC (Baby LC) usually in favour of his supplier.

Benefits:

  • Access to financing where no other financing is in place.
  • Financing facilities are tuned to the producers production and trade cycle
  • Off balance sheet operation / liquidity
  • Allows producer to benefit from his track record in a reduced risk environment

Key Features:
  • If there is disbursement of funds interest will be charged applicable interest
  • For non-fund based facility applicable rates for LC or guarantees applies.
  • Minimum/maximum amount will be based on the underlying transaction.
Structured Trade Finance
Description / Purpose:
This is a term used to describe various financing techniques or even restructuring techniques i.e. any structure that isolate asset being financed from the originator and used to support the financing being raised as collateral/ source of disbursement. Each structured trade finance deal is different from one another as each deal is tailored to meet individual customer needs. The facility is available to businesses that do not have strong balance sheets but have an underlying transaction that is self liquidating. Common structured trade finance deals include:-
Stock Financing Facility
This is available to producers who do not have access to balance sheet lending. Pre-requisite is to have all risk insurance and an assignment of proceeds. Producer obtains liquidity by leveraging his inventories well before the goods are sold onto the market
Warehouse Finance Facility
Facility enables the borrower purchase raw materials for processing, grading, packing and export. There is ready market for such goods.
Structured Pre-shipment Finance
Client receives funds to purchase inputs to the production process. Facility is secured by the receivables accruing based on firm export contracts backed by LC, CAD, and Insurance.
 Back to Back Letter of Credit
Provided to customers who are beneficiary of a Letter of Credit (Master LC) and willing to offer the same as security for establishment another LC (Baby LC) usually in favour of his supplier.
Benefits:
•     Access to financing where no other financing is in place.
•     Financing facilities are tuned to the producers production and trade cycle
•     Off balance sheet operation/Liquidity
•     Allows producer to benefit from his track record in a reduced risk environment
 
Key Features:
•     If there is disbursement of funds interest will be charged the applicable interest
•     For non-fund based facility applicable rates for LC or guarantees applies.
•     Minimum/maximum amount will be based on the underlying transaction.


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