Friday, June 5, 2015

Benefits of Structured Trade Finance in Commercial Transactions

Trade Finance products are specialized bank products designed to reduce the risks and uncertainties associated with commercial transactions, thus, facilitating trade. To compete successfully in the ever-expanding international trade arena, which requires the financial ability to minimize the buyer's cost, maximize the seller's offer, and manage the commercial, political and currency risks on both sides.
Trade Finance
Our team of trade experts regularly interacts with customers to update them on latest developments in the field of Trade Finance. We have a specialized team to structure trade finance deals specifically suited to the requirements of the customers. Our structured trade suite includes prepayment/pre-export finance, back-to-back letters of credit, invoice financing, facilities for intermediaries and Export Credit Agency (ECA) Financing. Customers will be able to take advantage of our experienced structured Trade Finance team, across product, industry and geographical diversities to mitigate their risk in trade finance, raise finances at competitive rates and lower transaction costs.

Structured Trade Finance (STF) is a specialized activity dedicated to the financing of high value commodity flows. Structured Trade Finance transactions are structured around the supply chain and commercial terms of customers, usually involving large bilateral strategic relationships. STF techniques are used largely in the commodity sector by producers, processors, traders and industrial end-users, and include:
v  Warehouse financing (finance of commodity inventories)
v  Borrowing base financing (finance of working capital assets on a revolving basis)
v  Tolling/processing (finance the conversion or processing of raw commodities into value added products)
v  Pre-export (prepayment) finance (medium to longer term requirements)
v  Reserve based lending.

Each financing arrangement is tailored to the particular needs of the client. Repayment of Structured Trade Finance transactions is made through the sale/export proceeds of the commodity and can be used to finance short term working capital or long term capital expenditure up to five years.

Structured Trade Finance Benefits for the customer include:
v  Securing strategic procurement
v  Diversification of funding
v  Greater access to finance for clients

v  Enhanced management of transport costs and/or delivery time frames.

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