Structured Trade Finance
Structured Trade
Finance
This is a highly secure, alternative trade financing facility aimed at overcoming challenges in obtaining conventional payment guarantees from governments and central or commercial banks. It is tailored for trading entities in high-risk frontier and emerging markets across the production, processing, and distribution value chain.
Key features of this facility include:
Collateral
The main security needed is a current asset, either a commodity stored in a warehouse, a receivable in a secured collection or escrow account, or a combination of both. A collateral management agreement (CMA) is formed with the trading entity and an appointed collateral manager to oversee the supply chain aspects of the collateralized commodity.
Off-Balance Sheet
As banks will retain the title of goods until repayment, this asset-backed approach allows trading entities to strengthen their financial standing by applying for off-balance sheet financing. Shifting the focus from the entity’s balance sheet to its transactional capabilities provides a cost-effective solution for commodity producers and distributors to trade in challenging markets.
