denotes premium content | Jan 6 2009 Trade & Forfaiting Review magazine archive
Volume 9 Issue 10
In September, the International Forfaiting Association meets for its 33rd annual industry conference – this year taking place in Istanbul. With this in mind and with forfaiting very much back on the trade finance agenda, Trade & Forfaiting Review takes a closer look at the market in this month’s cover story ‘Old dog, new tricks’.
There has been much speculation about the future role of forfaiting in recent years: some of it positive, but much of it doom-ridden. Yet the market has fought back and we’re beginning to see a new sense of optimism as the industry starts to look beyond traditional forfaiting transactions and open itself up to new business lines. Many are doing this by expanding their activities to include new paper and new trade finance products.
Piero Greco at WestLB believes most players have already broadened their definition of forfaiting to include any debt instrument that has a trade connection. Margrith Lutschg at FIMBank goes one step further. According to Lutschg, in order to ensure volumes and spreads, the industry needs to look at non-trade business as well. But not everyone feels comfortable with the boundaries so widely stretched.
Elsewhere in this issue, we chart the demise of the letter of credit and examine the potential of its successor: open account terms supported by next-generation technology (‘Embracing open account’). Also in the spotlight, thanks to the support of multilaterals and the success of BNP Paribas’ $750m pre-export finance with state oil company SOCAR, Azerbaijan has started to attract the attention of the world’s trade finance banks. TFR assesses the country’s trade finance prospects in ‘Cracking open the Caspian region’.
Meanwhile, in our legal review, Morris Blumenthal and Ursula Owczarkowski, London-based lawyers at DLA Piper, discuss the importance of taking security in emerging markets (‘Reliable security is worth the effort’). As always, if you would like to contribute to an upcoming issue of TFR, please contact me on mmartensen@ark-group.com. In the meantime, I hope you enjoy this issue.
Michele Martensen, editor
Features
Reliable security is worth the effort
Morris Blumenthal and Ursula Owczarkowski, lawyers in DLA Piper's structured trade and commodity finance group, review some common issues in taking security in emerging markets.
Cracking open the Caspian region
Little noticed until this year, Azerbaijan and neighbouring countries are attracting the attention of the world’s trade finance banks thanks to the efforts of the multilaterals. Amanda Greene reports.
Embracing open account
The letter of credit is dying, much to some banks’ chagrin. What is taking its place though – open account terms supported by next-generation technology – offers intriguing possibilities to both corporates and banks. Erika Morphy reports.
Forfaiting: Old dog, new tricks
The tight pricing, new competition and challenging markets have spoken. Most bankers are now convinced forfaiting must move away from its traditional form and strategies in order to survive. Erika Morphy reports.
Bridging the divide
Veronika Koroleva’s early legal education took place during the collapse of the Soviet Union when the laws were changing with little notice or explanation. As it turned out, this was perfect training for her later career as a trade finance specialist. Amanda Greene reports.
Regulars
Emerging Market Debt Pricing
For the past ten years, the market has been speculating on what may happen with Cuban debt after Fidel Castro leaves the scene. Castro’s recent temporary handover of power to his brother while he underwent hospital treatment has given that discussion significant new momentum...
Arrangers of trade finance loans
The latest trade data from Dealogic showing the top arrangers/mandated arrangers of trade finance loans by region, first half 2006.
From bull market to bust…?
Having recovered from severe declines in spring, how will metals prices react over the next quarter?
60-second interview
Roger Schwartz, senior vice president with Aon Trade Credit, talks Lebanon with Trade & Forfaiting Review.
The bigger picture
Throwing ad hoc solutions at customer financing problems is no longer a luxury many cash and trade banks can afford. Banks must now combine financial and technological solutions to meet the needs of each customer, says Peter Sargent of Lloyds TSB.
Letter from Hong Kong
A number of recent incidents have persuaded me to give birth to TFC Capital. There’s something sexy about having a company that sounds very ‘investment bankish’. I have to lose weight and start wearing Brookes Brothers ties and carry two BlackBerrys and four mobile phones. I would sell my Volvo and drive into the office car park in a Porsche everyday. However, if I could force myself into a Porsche I certainly wouldn’t be able to get out of it...
Market view
Despite the massive growth in international trade, it is clear the demand for traditional trade finance solutions such as letters of credit is falling fast, says Adi Bachar-Reske at Misys Banking Systems in London.
Country risk appetite
Kazakhstan – no let up in issuance with seven years now being seen in the market for the top-tier issuers. Ukraine – strong levels of activity with new sources of liquidity being seen for the top-tier names. Russia – in the chase for yield, interest is now being seen down the curve for Russian bank issuers. Some structured deals for corporates including outside the resources sector. Meanwhile, the Dominican Republic has been seen in the market with a number of buyers willing to re-enter...
