denotes premium content | Jan 6 2009 Trade & Forfaiting Review magazine archive
Volume 6 Issue 7
Our focus this month is vibrant, fascinating and rapidly changing India. Since its makeover as a free-market economy in 1991, India has made noteworthy progress in liberalisation. While it has quite a way to go before it could challenge its mighty neighbour China, Gregory B. Fager of the Institute of International Finance (p. 23) writes that India’s economic-growth model is having some success. According to Shalini Agarwal and Vaibhav Shukla of ALMT Legal (p. 26), India’s liberalisation strategy has succeeded in accelerating economic growth and international trade. But Trevor Utting of Moorgate Group (p. 30) reports that while its external economic position is favourable, India’s debt burden, budget deficit and tension with Pakistan negatively affect its internal position.
One would think that a large emerging economy like India would hold sizeable potential for forfaiting and factoring – and it does – but Veena Mankar of Global Trade Finance (p. 34) explains why that potential has not yet been realised and why it might be soon. Another opportunity that has not been fully exploited is cross-border leasing. Vinod Kothari, a Calcutta-based consultant (p. 37) makes a case for India as a prime market for it.
On a global scale, the secondary-forfaiting market is struggling, as Layisha Laypang reports (p. 18). Working in a niche market doubtless makes forfaiters somewhat used to fighting hard for the business they win. But the current economic landscape has made their jobs even tougher. Secondary-market traders, in particular, have long realised they cannot rely solely on primary-market players – who are struggling to source paper – to bring them business. This is now more true than ever.
In our company profile, we pay a visit to Moscow Narodny Bank (p. 13), which participated in more than half of all Russian syndicated deals last year. And for our personal profile, we chat with Daniel Cotti (p. 16), who has recently been named managing director of ABN Amro’s Global Trade & Advisory group.
As always, we welcome your news and views, so please feel free to contact us.
Features
Forfaiter fortitude
A need to hold onto risks that are hard to replace means secondary-market forfaiters must find new markets and actively source business, along with their primary-market counterparts, to stand any chance of survival. Layisha Laypang reports.
Trade rules: Regulating export and import in India
In 1991, India emerged as a free-market economy. Since then, the country has worked to liberalise its domestic economy and integrate into the global economy. According to Shalini Agarwal and Vaibhav Shukla, this new strategy has succeeded in accelerating economic growth and international trade.
A balancing act
India’s external position is looking pretty good, while a worrying debt burden, an entrenched budget deficit and fears of a war with Pakistan – among other factors – make its internal position considerably less impressive. Trevor Utting analyses the Indian sovereign credit.
Changing times, changing minds
After a slow start and some stagnation, forfaiting and factoring are finally catching on in India. Veena Mankar explains what has held back these forms of financing in the past and what could increase their popularity in the future.
India: Take it or lease it
Cross-border leasing is still a growing industry – albeit one marred by country-specific differences in taxation, laws and regulations. Vinod Kothari explains why India is an excellent market for cross-border leasing and why western companies should take notice.
Regulars
Profiting from Russia’s resurgence
As a Russian-owned, UK-regulated institution, Moscow Narodny Bank is a unique breed. Judging by the bank’s latest annual report, this clearly works to its advantage. Courtney Fingar reports.
Playing to win
Recently named managing director of ABN Amro’s Global Trade and Advisory group, Daniel Cotti has had a long and successful career in trade finance, but there is still more he would like to achieve. He talks to Courtney Fingar about what it means to win in the trade-finance business.
Indicative forfaiting rates
The anlsysis from Standard Bank London:
Trade Finance Index: Steady returns in first quarter
The LTP Trade Finance Index™ returned 0.25% in March, bringing the return for the first quarter of 2003 to 0.93%. This is significantly above the 0.72% returned in the same period of 2002.
Coface @rating country ratings update
Accessible free of charge via www.cofacerating.com, this service provides regularly updated ratings for 140 of the world’s most important trading nations and aims to help companies find out where they can trade safely in the world.
