denotes premium content | Jan 10 2009 Trade & Forfaiting Review magazine archive
Volume 9 Issue 3
What a difference a year makes. Twelve months ago Trade & Forfaiting Review (TFR) covered the Deutsche and ING-led $45m syndicated loan to Ukrsotsbank – the joint largest syndicated loan made to a Ukrainian bank at the time. A consortium of international lenders signed the deal on 14 November 2004, but later delayed drawdown over fears of political unrest following Ukraine’s November 2004 rigged presidential elections.
This year it’s a whole different story. Last month’s repeat Ukrsotsbank deal, although initially launched at $45m, came in oversubscribed at $80m and not a jitter in sight. In fact, it’s hard to turn around these days without hearing of another Ukrainian deal in the market. The past few issues of TFR, including this one, are a case in point.
Indeed, during the EU-Ukraine summit, which took place in Kiev on 1 December 2005, the European Union agreed to acknowledge Ukraine as a free market economy – a status the ex-Soviet republic has been keen to adopt as it seeks to improve trade ties with the West. Ukrainian President Viktor Yushchenko also met with US Secretary of State Condoleezza Rice on 7 December to discuss future membership to the European Union and NATO, and to win US backing for its bid to join the World Trade Organisation.
But that isn’t to say financiers should be, or indeed are, complacent with Ukrainian risk. Yushchenko, who came to power in the election re-run in December 2004 following the country’s peaceful Orange Revolution, has seen a slide in his popularity at home. Economic growth has slowed. And the coalition formed during the Orange Revolution collapsed when the pro-Western leader sacked the entire government in September this year amid corruption allegations. Indeed, as Michael Bond at Zurich notes in ‘A Global Approach’, this issue, “The most common error companies [or financial institutions] moving into emerging markets make is to underestimate the political risks they face…A partner with impeccable political connections can quickly turn into a liability with a change in regime.”
So that’s it from TFR for 2005. We’ll be back in February 2006 with the results of the annual Deal of the Year awards. In the meantime, I hope you enjoy this special year-end issue. A very happy holiday season to you all and a peaceful and prosperous 2006.
Michele Martensen, editor
Features
Legal spotlight 2005
Kate Richardson, senior solicitor in the trade and export finance group at Denton Wilde Sapte in London, looks back at the major English legal developments impacting trade finance transactions in 2005.
The coalface of trade
Christian Stauffer, managing director of EuroFin Asia in Singapore, examines the financing of coal resources through contract mining in Indonesia.
A global approach
As exposure to political risk in emerging markets intensifies, firms should look to global insurance programmes for protection, says Michael Bond, senior vice president and director of political risk insurance at Zurich.
Opening the flood gates
One by-product of the capital flooding into markets as a result of continuing high commodity prices is that investments are propagating further deals and additional finance opportunities for banks. Amanda Greene reports.
In search of assets
With margins bottoming out and traditional forfaiting business thin on the ground, forfaiters have faced rough times in recent years. But for those willing to move beyond classical transactions and source alternative lines, the outlook looks refreshingly bright. Erika Morphy reports.
A year of growth and creativity
2005 has been a strong year for ECA-backed funding; dominating most business lines at global trade banks. Indeed, it was a year that saw both banks and corporates push the envelope in leveraging the insurance arms of the ECAs and multilaterals, writes Erika Morphy.
A return to glory
UBS, the Swiss banking giant, recently recruited a commodity specialist to reassess its market presence in commodity trade finance. Michele Martensen reports from Geneva.
New York stories
An early pioneer of the automated letter of credit, the Bank of New York can also lay claim to being the first bank in the US to issue a traditional LC. Howard Bascom, managing director, explains all in a chat with Amanda Greene.
Regulars
Taming the tigers
Trade lending into East Asian markets has been a prominent feature of 2005. In his regular quarterly column, Peter Sargent says these relationships will come of age in 2006 only by keeping a close eye on the risks.
Emerging-market debt pricing
Azerbaijan – the ruling NAP party of President Aliyev has claimed victory in the country’s parliamentary election, now confirmed by the constitutional court...Iraq – in November, the first invitations for a debt-for-debt exchange were sent out to private creditors of Iraq with holdings in excess of $35m...
Export potential
Kate Sharp, CEO of the Factors and Discounters Association (FDA), says small companies should consider export factoring to help fund overseas trade.
60-second interview
With 80% of its business focused on transactional commodity finance, Credit Suisse has developed a sixth sense for this particular business line. Will China continue to shape commodity flows? What about other emerging markets? How is Credit Suisse remaining competitive, as margins continue to erode? Trade & Forfaiting Review spoke with Bernhard Lippuner, head of commodity & structured trade finance, about these and other topics.
Letter from Hong Kong
When I started my own little business I decided to give the market the impression we were doing well and expanding rapidly. So, we started doing press releases for absolutely everything, even when I lent my brother ten quid for a few pints...
Market view
In many respects global growth this year retained the characteristics of the 2004 vintage. The US and Asia were in the driving seat, while most of Europe struggled to achieve any sort of forward momentum...
