denotes premium content | Jan 10 2009 Trade & Forfaiting Review magazine archive
Volume 8 Issue 6
Trade financiers are having to look beyond the lines of what traditionally constituted ‘trade finance’ and look to other disciplines such as insurance and capital markets. As in any business, the market dictates the way ahead. And for trade-finance banks, this means offering a range of hybrid solutions that provide flexible products that can satisfy client needs. Consequently, trade finance is developing into a dynamic operation that accesses tools across many business lines, including FX, credit and interest-rate derivative products. At the same time, hedge funds are starting to fulfil a more important support function.
In addition, as cross-market collaboration grows and local-currency financing initiatives gain ground, so the links between local and international markets strengthen. Furthermore, as Valentino Gallo points out in our cover story, 'Pushing beyond the lines', there are a number of structural changes occurring in capital and local markets that are driving change. This has led to collaboration “not only between the capital fund raising and foreign-exchange markets, but also between banks and multilateral and developmental organisations”.
Of the multilaterals, Asian Development Bank has been at the forefront of encouraging local-market development. Not so long ago, it introduced the first local-currency swap in the Philippines, enabling banks to use peso funding for on-lending to domestic borrowers. The only way emerging economies can mitigate FX risk is by borrowing in local currency – the expectation is that swap initiatives such as this will eliminate maturity and currency mismatches (see ‘Market view’, this issue). There is no doubt programmes such as these are highly beneficial for emerging economies. In essence, the creation of new market-risks-hedging instruments enhances connectivity between countries and improves local liquidity.
Meanwhile, Deutsche Bank is currently working on a unique long-term trade-finance structure that is compatible with practically all local currencies and allows for comparatively low pricing (see 'Anatomy of a deal' in ‘Pushing beyond the lines'). While the bank is understandably reluctant to release too much information before closing, the transaction clearly demonstrates the remarkable evolution of trade finance over recent years.
Michele Martensen, editor
Features
Pushing beyond the lines
Increasingly, trade finance is developing beyond traditional lines to produce innovative financing solutions that embrace credit insurance and capital markets. And with disciplines such as local-currency financing coming to the fore, the result is a new breed of hybrid deal that is injecting life into trade structures. Erika Morphy reports on the market crossover...
Securitising opportunities
New research by finance company Demica suggests that growing demand for flexible post-LBO refinancing structures is fueling take-up of trade-receivables securitisation across Europe...
A perfect storm
Having endured some rough weather in recent years, export-credit-insurance business is now showing sure signs of positive growth...
A veritable wonderland
Aidan Applegarth, managing director of NoesisRede, explores the evolution of trade finance and seeks to understand its meaning in today’s marketplace...
Alla Russia con amore
Arturo Sferruzza and Charles Whitney, lawyers in the Milan office of Norton Rose, look at the growing trade connection between Italy and Russia, and review how changes to Russia’s banking regulations are impacting export-finance business...
Regulars
Letter from Hong Kong: David Sullivan
Following on from last month’s review of the structured-commodity-finance market in Asia, this month David Sullivan concentrates on SCF in China...
Market view
Ajay Sagar, principal structured finance specialist at Asian Development Bank in Manila, Philippines, reviews the latest local-currency financing developments...
Latin America: bright future for all?
Alberto Conde, head of global trade finance at BBVA in Madrid, assesses trade developments across Latin America and highlights the diverse nature of its individual economies...
Taking on the big boys
Over the past two years, members of KBC’s small but illustrious London-based team of STF experts have forged themselves an enviable position among the top trade-finance names by taking on the big deals. Kathleen Williams reports.
Arrangers of trade-finance loans by region
Amounts are calculated on an apportionment basis and deals are eligible for league-table credit/inclusion when a loan agreement has been signed and fees (where applicable) are paid.
For purposes of clarification, Eastern European borrowers include Russia. Amounts in US dollars.
Emerging-market debt pricing
Omni Whittington Commentary, April 2005
Country Risk Appetite March 2005
The analysis from Standard Bank London
