denotes premium content | Jan 10 2009 Trade & Forfaiting Review magazine archive
Volume 7 Issue 3
Editor's foreword
In some ways, this year was characterised as much by what didn’t happen as what did. Certainly, 2003 lacked the trauma of a September 11th or the drama of an Argentine-style default. When it came to forfaiting in particular, what was lacking was volume, continuing the rather unpleasant trend of 2002. Despite signs of recovery in Brazil and some hope that Argentina’s President Nestor Kirchner can set his country on the right track, Latin America is still a bit shaky and it looks like it will be quite some time before Argentina can post the big numbers and provide reliable business for forfaiters and other trade financiers.
Of course, there were market-shaking developments, not least of which was the war in Iraq, which, among many other effects, opened up an interesting new trade-finance market. And, as other markets stagnated, China continued its upward economic trajectory, in the process presenting tempting new opportunities for financing its growing volumes of imports and exports. Meanwhile, the impending accession to the EU of several Central and Eastern European countries has already begun to change financing requirements in that region and makes this market one to watch for next year and beyond.
However, this year was all about Russia, which followed a remarkable path to investment-grade status, leading to questions about the relevance of structured deals in that market. In fact, there was much talk earlier in the year that Russian structured trade finance (STF) was soon to die out. But following some big oil deals this summer that went the structured route – not to mention the recent arrest of Yukos chief Mikhail Khodorkovsky, which could yet spook the ever-jittery bond brigade – this is far from a safe assumption. Although China could well become the new Russia, given its sheer economic clout and continued liberalisation, Russian oil will likely continue to line the pockets of eager STF bankers, and the country will continue to dominate industry news and discussion, throughout next year as it has the past few years.
As this is a year-end double issue of Trade & Forfaiting Review, we will back in print in February, when we will announce our winners for ‘Deals of the Year’ for 2003. (Last chance to get nominations in.) In the meantime, let me wish all of our readers an enjoyable holiday season and a happy and prosperous 2004.
Courtney Fingar is editor of Trade & Forfaiting Review.
Features
Made in Switzerland
While expanding globally, Credit Suisse and UBS have held fast to their ‘Swissness’, as have most Swiss forfaiting institutions. That’s due to a belief that the Swiss brand carries with it an image of efficiency, discretion and reliability – not bad qualities for a trade-finance bank to espouse. The result is a market that is perhaps less exciting than it once was, but is nonetheless durable. Courtney Fingar reports.
Not-so-happy tidings
With the Thanksgiving season wrapping up in the United States, it’s just as well that most forfaiters are based in Europe and elsewhere abroad because, quite frankly, they haven’t got a whole lot to be thankful for this year. However, there were a few small blessings. Courtney Fingar reports.
A vicious circle
With little going on in Africa and most banks still afraid of Argentina, Russia remained the most interesting market for structured commodity finance in 2003. Trade financiers structuring deals there have certainly been on a merry-go-round this year, and where it stops, no one knows. Erika Morphy reports.
Standing room only
Spurred on by Basel II, banks have poured money into their structured trade and export-finance operations, with the result being a saturated market, more competition and thinner margins. These developments, coupled with a resurgence of export-receivables securitisations in Latin America, characterised 2003. Erika Morphy reports.
Mixing the trade-services cocktail
What’s the right mix for a successful trade-services offering? In 2003, it was a splash of customer-process orientation, a dash of collaboration and a twist of standardisation. As Urs Kern, managing consultant in the global financial services division of Cap Gemini Ernst & Young Germany, writes, they are likely to remain party favourites well past the new year.
Crucial decisions
At the end of a year of significant legal developments in international trade, Maire Ni Aodha, solicitor, and Grace Asemota, trainee solicitor, of Clyde & Co review three of the most important court decisions of 2003. The first has serious ramifications for commodity traders and financiers, the second considered the autonomy of LCs, and the third reviewed banker’s duties.
Regulars
Organisation profile: A more perfect union
Established in 1934, the Union of International Credit and Investment Insurers, otherwise known as the Berne Union, is now a powerful international body made up of 52 members from 43 countries and locations. Kimberly Wiehl speaks to Kathleen Williams about the union’s considerable influence and role, its perceived exclusivity and its outlook for trade finance in 2004.
Personal profile: Setting the agenda and delivering results
Following the surprise IFA board reshuffle in September, in which four prominent members departed amid fierce campaigning and debates about new market-practice guidelines, new chairman Dino Skandalis speaks to Kathleen Williams about managing member expectations, his current and future plans for the association, and the need to deliver results quickly.
Rise in Libor rates causes low return
The LTP Trade Finance Index returned just 0.05% during October. The main contributor to this low return was a rise in Libor of 0.18%, which caused a 0.19% fall in capital value over the month. This is the lowest return since March 2002, when the underlying one-year Libor rates rose by 0.6%.
