denotes premium content | Jan 9 2009 Trade & Forfaiting Review magazine archive
Volume 7 Issue 4
Editor's foreword
Choosing the best deals of the year is difficult. Deciding the appropriate criteria is the toughest part. In the end – if readers will pardon the unseemly comparison – it is much like the US Supreme Court’s famous comment on pornography: it is difficult to define, but you know it when you see it. While creating an exact methodology for choosing the year’s most exciting deals is challenging, some deals are obviously winners, for a whole range of reasons. They can’t all be measured by the same yardstick.
In some cases, like the facility for Russia’s Aeroflot that is our pick for the best export credit agency financing, it was a list of firsts – the first ECA asset-based financing deal in Russia and the first in the country to benefit from a 100% guarantee from all three ECAs involved. Our import-finance deal of the year, a two-and-a-half-year LC facility for a Chinese power-equipment company, was unique in that the arranger, JPMorgan, did the syndication itself instead of going through the primary market; it was also noteworthy for its size ($600m) and clever risk mitigation.
Though not an actual deal per se, we felt JPMorgan’s winning bid to head the consortium charged with operating the new Trade Bank of Iraq was one of the more significant events of last year – with big implications for trade finance’s latest market – and thus worthy of mention as mandate of the year.
The pre-export-finance category was rife with competition, with several notable and impressive deals, mainly in the Russian oil sector. Though not the biggest or longest last year (those distinctions go to Yukos and Lukoil respectively), the $500m ABN Amro-led deal for Rosneft nabbed the prize for being the best structured and best priced of last year’s big Russian oil deals. Meanwhile, financing of the $2.1bn Umm Al Nar independent water and power project in Abu Dhabi was the largest project-finance deal in the United Arab Emirates to date and the first in the region since the conclusion of the Iraq war, not to mention one that included the largest Islamic-financing component to comply with Sharia law. For these reasons, it was chosen as project-finance deal of the year.
Citigroup and BBVA’s Petrobras deal was the largest export-receivables securitisation to come out of Latin America in the first half of 2003, one of the largest unwrapped export-receivables securitisations in Brazil’s history and the first corporate bond issue executed in 2003. But more importantly it helped investors feel confident about Brazilian risk again and led to the execution of several other corporate deals during the second part of the year. Likewise, Sonangol’s whopping $1.25bn commodity-financing deal in September 2003, apart from its attention-grabbing size, also sent an important message to investors and trade financiers, in this case about Angola’s continuing progress and potential for other Sub-Saharan African markets.
And Deutsche Bank London and Citibank NA London’s $245m syndicated trade-related loan for Bank TuranAlem – the first Kazakh bank loan with an 18-month tranche – signified an increasing comfort with top-tier Kazakh bank risks. It was also the largest ever syndicated loan in the CIS.
Congratulations to all the banks that participated in these stellar deals, and we look forward to seeing what deals they’ll offer us to consider in 2004.
Courtney Fingar is editor of Trade & Forfaiting Review.
Features
Small deal, big problems
The larger global financial institutions have traditionally shied away from small deals, saying the hassle is not usually worth it. Basel II and other developments have not helped matters by causing banks to take a more conservative approach. But many mid-market companies, and the financiers that work with them, are taking matters into their own hands and coming up with innovative solutions. Erika Morphy reports.
For those with an appetite for high risk and returns
Set against a backdrop of civil conflict in neighbouring countries and the constant potential for political instability, but in a continent that is rich in natural resources and opportunities, South Africa’s banks are experiencing an increase in foreign interest and trade flows, despite domestic tensions. Kathleen Williams speaks to the “big four” about their views on operating in a higher risk environment and what lies ahead on the Sub-Saharan trade-finance horizon.
Charging ahead with integration
Intra-regional trade in Sub-Saharan Africa has long been hampered by a host of political, economic and logistical barriers. But there are signs that a new era of regional integration is emerging, opening up trade and trade-finance opportunities. Ryan Short reports.
A tough job – but somebody’s got to do it
Pity the export credit agencies: staying within the confines of OECD rules while keeping exporters happy is not easy, and they could be forgiven for feeling that they have a fairly thankless task sometimes. But many have made a real effort lately to keep up with ever-changing demands and shed their reputations for red tape, with varying degrees of success. Erika Morphy reports.
Clarifying things for compliance’s sake
Introduced in 2003 to clarify international standard banking practice for the examination of documentary credits issued subject to the UCP 500, the ISBP 645 is explicitly aimed at documentary-credit bankers to help them examine and determine compliance. But Ravi Mehta, a certified trade specialist and independent export-finance consultant, explains that there are also implicit benefits for exporters in terms of document preparation and pre-presentation examination.
Regulars
Company profile: Waking the giant
America’s biggest bank wants to be bigger in trade – in all areas. The Global Transaction Services group was formed more than a year ago to help bulk up the short-term business and bring cash, trade and securities together, among other things. Courtney Fingar sat down with Ralph Shaaya and Naveed Riaz to discuss their objectives for the group.
Personal profile: Driving trade and development in Africa
Having established himself as one of the key pioneers of change in South African agribusiness during his career at Absa, Peter Martin moved his team to Barclays Bank in 2003 to develop its structured trade- and commodity-finance business in Africa. Kathleen Williams speaks to this well-known trade financier about his background, experience, motivations and future goals.
Political-risk rating guide: top 50 countries
Country-risk appetite
The analysis from Standard Bank London:
