Structured Commodity Finance Techniques and Applications for Successful Financing Arrangements Second edition Structured Commodity Finance Techniques and Applications for Successful Financing Arrangements Second edition Emmanuelle Moors and Lamon Rutten E U R O M O N E Y B O O K S Published by Euromoney Institutional Investor PLC Nestor House, Playhouse Yard London EC4V 5EX United Kingdom Tel: +44 (0)20 7779 8999 or USA 11 800 437 9997 Fax: +44 (0)20 7779 8300 www.euromoneybooks.com E-mail: hotline@euromoneyplc.com Copyright © 2014 Euromoney Institutional Investor PLC ISBN 978 78137 192 This publication is not included in the CLA Licence and must not be copied without the permission of the publisher All rights reserved No part of this publication may be reproduced or used in any form (graphic, electronic or mechanical, including photocopying, recording, taping or information storage and retrieval systems) without permission by the publisher This publication is designed to provide accurate and authoritative information with regard to the subject matter covered In the preparation of this book, every effort has been made to offer the most current, correct and clearly expressed information possible The materials presented in this publication are for informational purposes only They reflect the subjective views of authors and contributors and not necessarily represent current or past practices or beliefs of any organisation In this publication, none of the contributors, their past or present employers, the editor or the publisher is engaged in rendering accounting, business, financial, investment, legal, tax or other professional advice or services whatsoever and is not liable for any losses, financial or otherwise, associated with adopting any ideas, approaches or frameworks contained in this book If investment advice or other expert assistance is required, the individual services of a competent professional should be sought The views expressed in this book are the views of the authors and contributors alone and not reflect the views of Euromoney Institutional Investor PLC The authors and contributors alone are responsible for accuracy of content Note: Electronic books are not to be copied, forwarded or resold No alterations, additions or other modifications are to be made to the digital content Use is for purchaser’s sole use Permission must be sought from the publisher with regard to any content from this publication that the purchaser wishes to reproduce (books@euromoneyplc.com) Libraries and booksellers and ebook distributors must obtain a licence from the publishers (books@euromoneyplc.com) If there is found to be misuse or activity in contravention of this clause action will be brought by the publisher and damages will be pursued Typeset by Phoenix Photosetting, Chatham, Kent Contents Forewordxv Prefacexvii List of abbreviations xix Acknowledgementsxxi About the authors xxiii Introductionxxv Evolution of commodity financing xxvi The 1980s: financing trading companies on a corporate basis xxvi The 1990s: financing commodity producers and importers on a structured basis xxvii The 2000s: shock and awe xxviii What are the 2010s bringing? xxix What is structured commodity finance? xxx Scopexxxi Part 1 Traditional commodity trade finance Introduction to Part 1 Building blocks of trade finance: payment methods Open account Advance payment Documentary collection Documentary letters of credit Bank payment obligations 5 13 Basic trade financing instruments Post-shipment financing based on letters of credit Trade paper Bills of exchange and promissory notes Banker’s acceptances Pre-shipment financing for importers Pre-shipment financing for exporters Evaluation of basic trade financing instruments 15 15 15 16 17 17 18 18 More advanced instruments and techniques Tailored letters of credit Revolving letters of credit Back to back letters of credit Transferable letters of credit Red-clause letters of credit 19 19 19 20 22 23 v Contents Green-clause letters of credit 25 Evaluation of more complex letters of credits 26 Factoring and forfaiting, the fraternal twins 26 Forfaiting26 Principles and characteristics 26 Raising financing with forfaiting 27 Evolution of the forfaiting markets and participants 27 Factoring28 Principles and characteristics of cross-border factoring 28 Raising financing with factoring 29 Evolution of the factoring markets and participants 30 Evolution of traditional trade finance Part 2 Structured commodity finance techniques Introduction to Part 2 32 35 Inventory financing 37 Principles and background 37 Basic transaction flows 39 Term sheet 39 Amount39 Borrower39 Commodities40 Disbursement41 Financing ratio 41 Tenor41 Cost42 Repayment42 Security42 Benefits of inventory financing 44 Exporters can raise attractive financing earlier in the marketing cycle 44 Lenders have more control over the commodities 45 Variations: financing the flow 45 Variations: ownership-based financing 47 Limits of inventory financing 49 Required logistics is costly 49 Additional exposure to volatile commodity markets 49 Banks remain exposed to third-party fraud and performance risk 49 Structured pre-export financing Principles and background Pre-export receivables financing Prepayment financing vi 54 54 54 57 Contents Basic transaction flows 58 Pre-export receivables financing 58 Prepayment financing 58 Term sheet 59 Pre-export receivables financing 59 Amount59 Borrower59 Commodities59 Disbursement60 Financing ratio 60 Tenor61 Cost61 Repayment61 Security61 Prepayment financing 64 Amount64 Borrower64 Commodities64 Disbursement64 Financing ratio 65 Tenor65 Cost65 Repayment65 Security66 Benefits of structured pre-export financing 75 Exporters can leverage their buyer relationships 75 Borrowers can benefit from lower payment risks of OECD and other creditworthy buyers 76 Pre-export structures can support longer-term financing 76 Additional benefits of prepayment structures 76 Limits of structured pre-export financing 77 Exporters are tied to existing buyers 77 Previously approved buyers can become off-limits 77 All-in cost can be high 77 Banks remain exposed to performance risk 78 Building on structured commodity financing techniques Revolving funding for the full production cycle Value chain finance Financing indirect exporters Adapting a principal financing approach to trade finance Using structured commodity finance techniques for imports into nonOECD countries Inventory-based import financing 80 80 83 87 88 89 90 vii Contents Receivables finance for import transactions 91 Additional security features 91 Alternative assets for financing the commodity sector 94 Transport and transit fees 94 Royalties95 Tax receivables 95 Balance sheet and income statement enhancing structures 95 Leases96 8 Countertrade 99 Existing forms of countertrade 99 Tolling99 Barter101 Counter-purchase102 Compensation trade 103 Buy-back104 Offset105 Switch trade 105 Evaluation of countertrade 106 9 Securitisation 109 Principles 109 Basic transactions flows 109 Variations110 Overview of commodity sector securitisation 110 Beneficiaries and use of funds 110 Investors in commodity-linked securitisations 111 Trends in securitisation 114 Born in the USA 114 Securitisations for large commodity producers and consumers 116 Securitisation for tax optimisation and balance-sheet effect purposes 119 Securitisation of commodity traders’ receivables 122 Securitisations of banks’ commodity trade finance portfolios 123 Evaluation of commodity-linked securitisations 126 More flexibility and better terms for commodity owners 126 A stronger security package can attract a wider range of investors 127 Dependence on ‘established’ emerging markets 127 10 viii Due diligence Components of the marketing cycle Availability of the commodities Market risks Commodity buyers Price risk management 130 131 135 136 137 138 Contents Contractual aspects Direct and indirect parties to the transaction Commodity owner Warehouse operators Inspection companies and collateral managers Other commercial parties Country risks Impact on performance Transfer and other payment risks Legal and regulatory environment Structural considerations 139 140 140 142 143 145 145 145 146 147 148 11 Legal aspects Legal documentation Financial documents Facility agreement Security agreements Other financial documentation Supporting commercial documents Sales contracts Insurance documents Additional supporting documents Legal advice and opinion Legal opinions Which law? Inside versus outside legal advice 150 150 150 150 151 151 151 151 152 152 152 153 154 154 12 Evaluation of structured commodity finance techniques Providing attractive financing in difficult situations Supporting access to longer-term financing Supporting international trade Improving emerging markets economies 156 156 157 158 159 Part 3 Third party credit enhancement: insurance and guarantees Introduction to Part 3 163 13 Insurance Political risk insurance History of political risk insurance Users of political risk insurance Events covered by political risk insurance Credit risk insurance History of credit risk insurance Users of credit risk insurance 165 165 165 166 167 168 168 169 ix Applications is made against the sale of the crop It has also been used to finance cattle where the price paid is used for the purchase of calves (with repayment made against the sale of cows once they have been fattened and made ready for sale, all within a 120-day financing cycle) It can also be used to buy other goods in cases where the seller needs working capital to cover financial requirements before he can deliver – as long as the commodity involved is fungible This has included, for example, long-term power supply agreements There are strict conditions to the validity of a salam, in particular: • • • • • • • • • the commodity should not yet exist when the finance is provided; the full purchase price is paid at or near to the moment that the contract is signed; the settlement price should be known in advance; the underlying asset is standardisable, easily quantifiable and of determinate quality So, for example, ‘precious stones cannot be sold on the basis of salam, because every piece of precious stones is normally different from the other either in its quality or in its size or weight and their exact specification is not generally possible’;10 the contract cannot be for specific commodities, for example, commodities identified as coming from a specific field; quantity, quality, maturity date and place of delivery must be specified clearly in the contract; the underlying asset must be available and actively traded in the markets throughout the period of the contract, or at its maturity (different Sharia boards have different opinions); the bank does not enjoy ownership of the goods until delivery has taken place; and the buyer/bank is allowed to require security from the seller, in the form of a guarantee or mortgage In the case of a default in delivery, the borrower or his guarantor may be asked to deliver the same commodity by purchasing it from the market, or to reimburse the sum advanced to him Istisna Istisna is similar to salam, in that it constitutes a simple pre-paid forward sale The bank/ buyer orders a specified quantity and quality of manufactured goods, deliverable at an agreed price He may or may not pay the full purchase price in advance However, while salam is for commodity trade, istisna applies to goods that need to be manufactured (made-to-order items) And while salam requires a full up-front payment, in istisna, payment can normally be made at various stages of the process Moreover, the time for delivery of the product may not be fixed in advance In general, an istisna is a contract of acquisition of goods by specification or order where the price is paid in advance but goods are manufactured and delivered at a later date It can be used for short or long-term arrangements It is used for the acquisition of raw material; processing of raw material (including tolling); or for the marketing and selling of finished goods It can also be used as a form of pre-export finance, with the bank buying all goods for which a firm export contract has been established In Iran, a financing form similar to istisna called salaf is used to provide working capital to processors and manufacturers The bank 288 Islamic banking pre-purchases the goods that will be produced The goods must be described in detail, and delivery must be made within a year or within one production cycle, whichever is the shorter Sukuk Sukuk are often described as Islamic bonds In fact, buyers of sukuk should have a stronger position in the case of bankruptcy of the issuer than buyers of conventional bonds as sukuk, if well-structured, is based on the ownership of assets.11 They account for most of the Islamic capital market (there are also Sharia-compliant private debt securities, medium term notes (MTNs), asset-backed MTNs, and money market instruments including government bonds, notes and Treasury Bills) Most sukuk are placed and traded over the counter, but some are exchange-traded, particularly in the Middle East (Dubai) and Malaysia, but also in Luxembourg, Singapore, Hong Kong and London As is clear from the discussion above, sukuk can have many different underlyings (and they also exist in hybrid forms).12 • Murabaha – the bithaman al ajil (deferred payment) sukuk are popular in Malaysia but controversial in other countries (because such secondary trade is considered as debt trading) Other forms of murabaha sukuk have been found Sharia-compliant in the Middle East • Istisna – issued as an equivalent of project finance bonds, in particular for real estate projects Secondary trading is not allowed, nor is trading on a portfolio of projects (istisna bonds have to be based on a single project) • Ijara – the underlying for most corporate and many sovereign sukuk, in part because secondary trading is allowed By incorporating the ijara agreement, a clause that calls for quarterly or six-monthly renewal of lease agreements, ijara sukuk provide the equivalent of floating rate notes – the return is generally benchmarked to Libor or Euribor • Bai al salam – first issued by the Bahrain Central Bank in 2002 (using aluminium as an underlying asset), creating the economic equivalent of a three-month Treasury Bill • Mudarabah – particularly used by Islamic funds that wish to list (sell participations) These funds tend to specialise in equity, commodities or leasing operations • Musharakah – an investment partnership; the most popular form of sukuk after the ijara sukuk These sukuk are often structured in such a way that returns are guaranteed by the project promoters This structure was used, for example, in early 2006 in the then world’s largest ever sukuk worth over US$3.5 billion, to finance the acquisition by the Dubai Ports Authority and DPI Terminals of P&O Ports Investors received certificates of partnership, giving them a pre-determined share of any profits or losses In the commodity sector, one example is a sukuk backed by the equivalent of a Volumetric Production Payment agreement in the US in 2006 – this is further described in Box 22.3 289 Applications Box 22.3 The first sukuk in the US In 2006, a small US oil company used a musharakah sukuk to raise funds International investors bought sukuk subscription notes from an ‘issuer special purpose vehicle (SPV)’ in the Cayman Islands, for a total of US$165.6 million This SPV used the funds to invest in a ‘purchaser SPV’ in the US, which in turn used part of the funds to buy 13 years of royalty rights from an oil company, East Cameron Partners (ECP), in Houston The royalty rights were on two oil and gas fields offshore Louisana, in the Gulf of Mexico The purchaser SPV retained some of the funds to develop the fields, to buy put options to protect itself from the risk of falling oil and gas prices, and to fund a reserve account that would help ensure that investors in the sukuk could receive the expected 11.25% return 10 Payment of return, and redemption of sukuk ECP Purchase of overriding royalty interest, for US$114 million Payment of funding return and repayment Oil and gas delivery Funding Purchaser SPV Issuer SPV US$4 million Reserve account Sukuk holders Payment to royalty holders US$165.6 million Sukuk subscription Put options Development expenses Payment to originator Offtaker Allocation account Payment US Government, other royalty holders Payment Source: Authors’ own The royalty from the fields was to be used to pay the sukuk holders a return However, they bore reserve risk, price risk (to the extent it was not hedged) and certain operating risks, and these high risks were reflected in the issue’s Standard & Poor’s rating of CCC+.1 Continued 290 Islamic banking While recognised as a ‘deal of the year’ in 2006, ECP, the originator, filed for bankruptcy in October 2008, a month after a severe hurricane had seriously damaged its productive capacity ECP also requested the Louisiana court to reclassify the sukuk as a secured loan, rather than as a true sale of assets The bankruptcy court, however, rejected this request, recognising that the sukuk holders were indeed the owners of the royalty rights Source: Sweder van Wijnbergen and Sajjad Zaheer, Sukuk Defaults: On Distress Resolution in Islamic Finance, July 2013 ‘East Cameron gas sukuk: the dawn of a new frontier’, Islamic Finance News Deal of the Year 2006; Munoz, JS, ‘Financing of oil and gas transactions’, Texas Journal of Oil, Gas and Energy Law, 2009 Is Islamic banking a form of structured commodity finance? With Islamic banking, banks need to earn their profit not simply because they make money available, but because they take a production or trade-related risk Islamic banking and structured commodity finance have a common purpose: to make a particular commercial transaction possible thanks to sophisticated financial engineering The need to so stems, in the first case, from the necessity to make the transaction legal vis-à-vis Sharia law and, in the second case, from the necessity to bring certain credit-enhancement elements to lenders There is nothing in the tenets of structured commodity finance that should a priori prevent its techniques from being consistent with the requirements of Islamic banking Similarly, with the right credit-enhancement elements, most forms of Islamic banking could qualify as structured commodity finance On the other hand, according to the precepts of Islamic banking, the Islamic bank is entitled to a portion of the profits of a particular transaction only to the extent that it assumes risk If the bank takes no risk, it can only charge for its administrative costs Thus the elusive watertight structured commodity finance transaction that would eliminate all risks could not be reconciled with the principles underlying Islamic banking For a more extensive discussion, see Rutten, L, ‘Islamic finance and structured commodity finance techniques: where the twain can meet’, UNCTAD, May 2006 First estimate from Davies, A, ‘Global Islamic finance assets hit $1.3 trillion – study’, Reuters, 29 March 2012, second estimate (Islamic financial assets increasing from US$1.6 trillion by end-2012 to US$1.9 trillion in 2013) from di Mauro, F, Caristi, P, et al, ‘Islamic finance in Europe’, European Central Bank, Occasional Paper Series No 146, June 2013 This argument has been used in Pakistan in the mid-1990s to stop the cotton sector from re-introducing a local futures market Details on the structure of the deal can be found in Islamic Trade Finance Corporation (ITFC), ‘Progress report on ITFC’s role in the promotion of intra-OIC trade’, 27th Meeting of the Follow-Up Committee of the COMCEC, Ankara, Turkey, 1–2 June 2011 ‘PT Angels – structured murabaha finance’, Trade Finance, 26 March 2010; for further details on the transaction see the ITFC website, www.itfc-idb.org/content/pt-angels-indonesia Rutten, L, ‘The under-explored potential of SCF’, Trade Finance, April 2002 291 Applications Richard Thomas, ABC International Bank, quoted in ‘Demystifying Islamic trade’, Trade Finance, May 2000 Said, MM, ‘Diminishing musharah – Islamic financial instrument manual’, Institute of Islamic Finance, Pebble Hills University, August 2010 Richardson, CF ‘Islamic finance opportunities in the oil and gas sector: an introduction to an emerging field’, Texas International Law Journal 42, 2007 10 www.alrajhibank.com.sa/instruments-salam.htm 11 There have been quite a few defaults of sukuk – 15 in 2009 alone – and in the legal challenges to the rights of sukuk holders, at times the transfer of assets to the SPV issuing the sukuk was upheld as a true sale, but at times it was not So legally careful structuring is essential See van Wijnbergen, S and Zaheer, S, ‘Sukuk defaults: on distress resolution in Islamic finance’, Duisenberg school of finance /Tinbergen Institute Discussion Paper, TI 13-087/VI/DSF 57, July 2013 12 See for an extensive discussion, International Islamic Financial Market, ‘Sukuk Report’, 1st edition, 2010 292 Chapter 23 Part – conclusion The range of applications for structured commodity finance techniques is undoubtedly expanding These techniques have served virtually all commodities produced or extracted on all continents, and are now capable of providing finance to all participants in the commodity chain In particular, tighter and more creative structures have led structured commodity finance into the medium-term, now a common feature, and have enabled second-tier producers to access hard-currency financing at attractive terms and conditions It can also be reasonably assumed that the use of structured commodity finance techniques is under-reported ‘Many structured trade deals remain hidden because of the banks’ need to retain their competitive strategies.’1 Borrowers also not like to confess to the granting of security to their lenders, while in many cases insurance cover cannot be publicly divulged Also, ‘the players in the structured trade and structured commodity finance market are very innovative, and at times banks are reluctant to divulge structures to the market in order to maintain their structuring edge.’2 That said, some listed companies provide full details of their security package, as did, for example, Grupa Lotos SA in its Q3-2008 financial report with regard to its €1.75 billion structured financing Structured commodity finance deals pave the way for an eventual access to the capital markets ‘Increasingly, the banks are actually lending to a corporate, and using the security structure as a fallback position, rather than expecting to get paid out of the export proceeds It is only a matter of time before bond issues become the principal source of debt finance for big Russian companies.’3 More bluntly, ‘there comes a point in every cycle where the sheer “embuggerance factor” of doing a performance risk deal is outweighed by the possibility of getting medium-term bonds away at similar pricing (if it is available, and if you – and typically your government – have, or can get a credit rating).’4 But financial markets remain cyclical; in difficult times, credit and shareholder quality, hard currency generation, political and credit risk mitigation become critical for attracting funding – and structured finance a preferred tool to overcome weaknesses – but structures can be expected to loosen up as soon as the sky clears Post the 2008 financial crisis and with the introduction of Basel III, the pressure on banks to make optimal use of their capital has increased Structured finance techniques have proven their use in this regard, and for many borrowers, structured finance may prove more readily available and less expensive than other forms of credit At the same time, the capital market has become more open to financing commodity trade, and rather than competing with capital market investors many banks will try and find ways to co-operate with them – to make loan syndications easier, to lay off risks that come with certain banking relationships without upsetting these relationships, and to refinance lending portfolios Working with capital market investors also makes banks more resilient to changes in the general conditions of commodities As a commodity banker commented in 2012, ‘We have no choice Our balance sheet cannot move up at the same pace as commodities prices continue to increase.’5 293 Applications Malcolm Watson, then deputy general manager of KBC’s trade finance unit quoted in Bell, J, ‘Keeping the deals flowing’, Trade Finance, November 2001 David Miller, then with KBC, quoted in endnote John MacNamara, then with Deutsche Bank, quoted in Pirani, S, ‘Onward and upwards’, Trade Finance, April 2002 MacNamara, J, ‘Performance risk deals’, Trade Finance, April 2002 Jacques-Olivier Thomann, head of commodity trade finance at BNP Paribas, quoted in ‘Re-securitising commodities financing’, FT Alphaville, 21 March 2012 294 Part Final notes 295 Chapter 24 Final notes Banks rarely take credit risk without requiring some security, even if only a positive covenant to maintain existing activities When borrowers are based in emerging countries seeking to finance operations in the commodity sector, the security required by lenders tends to be quite onerous, for example, a mortgage on fixed assets or partial cash collateral Unless, of course, the financing is arranged on a structured basis The techniques of structured commodity finance rely on a security structure that is both acceptable to lenders and less restrictive for borrowers Lenders trade off the payment risk of borrowers for their performance risk, which is more controllable and more immune to country risk For borrowers, the security structure is essentially a mere formalisation of existing commercial flows and relations, and thus is not excessively painful Structured transactions are designed on an ad hoc basis and require the identification of every risk involved in the proposed transaction and their mitigation through third-party credit enhancement (buyers’ payment in offshore escrow accounts, performance bond, commodity price risk hedge and so on) The result is that high-risk borrowers can access financing at better terms and conditions than under comparable alternatives By linking the financial obligations of the borrower to its commercial activities and the risks thereof, structured commodity finance treats the company as a whole This holistic approach is supported by a due diligence process that sometimes resembles a SWOT analysis,1 typically used in the area of strategy and psychology, rather than a traditional financial statements analysis There are few prerequisites for the use of such techniques, except perhaps a reliable performance track record on the part of the borrower Plus, of course, a creative mindset from the banker ‘Many of the more innovative financings of the last decade were based on the recognition of a receivable where, earlier, financiers had not identified any.’2 But the due diligence is time-consuming and thus expensive Also, as calculated by a legal adviser specialising in this field, the success rate of structured commodity finance deals (that is to say, the success in moving from the idea of a transaction to a signed transaction) is only about one in four.3 And even with a good structure, timely repayment still requires a tight monitoring of the underlying elements of the transaction and relies on the goodwill and honesty of the borrower and other parties involved In terms of its applications, structured commodity finance is an effective tool to provide attractive short and medium-term bank financing to mid-size commodity exporters in highrisk countries But its techniques are increasingly used by many non-bank lenders (such as, multilateral banks, capital markets and trading companies) and now support a large range of financing needs, as the separation line between trade, export and project financing is thinning – and the financing solutions applicable to all players in the commodity market value chain Moreover, by fostering tighter control of commercial operations, good corporate governance and transparent borrowing practices, while strengthening direct relationships with 297 Final notes foreign banks, structured commodity finance has paved the way for capital market issues by companies operating in the commodity sector of emerging markets This gradual emancipation from traditional lending is particularly useful for longer-term financing because of provisioning requirements faced by banks under the successive Basel Accords Structured commodity finance should be actively encouraged by multilateral development banks and development finance institutions to complement their trade finance support programs, as a tool for poverty alleviation in emerging countries Structured commodity finance has indeed proven its ability to provide financing of last resort in times of economic, financial or political crises In that sense, structured commodity finance is counter-cyclical Its techniques also enable lenders to come in earlier in the production cycle and thus add more value to the commodity sector of developing countries Donors should emulate initiatives such as those taken in the early years of structured commodity finance by UNCTAD, or those taken currently by the IFC These initiatives have contributed to the growing use of structured finance techniques by developing country banks Donors should also specifically support infrastructure projects relevant to performance-based financings, such as inland roads, port facilities and warehouses, as well as institution-building to help create the support systems for commodity trade and finance (such as grading services, collateral management agencies and registrars) Of course, donors should also reconsider obligations placed in multilateral lending that might impede structured deals, such as negative pledge covenants To conclude on a simpler note, it is to be hoped that companies operating in the commodity sector will be convinced of the benefits to add structured commodity finance to the range of possible financing alternatives While a particular financing need may be better met with other forms of financing, the due diligence required to assess the opportunity for, and design of, a structured finance transaction has invaluable and lasting benefits for a company: to know itself better Strengths, Weaknesses, Opportunities and Threats Rutten, L, ‘The under-explored potential of SCF’, Trade Finance, April 2002 As quoted by Geoffrey Wynne, a partner in the law firm Sullivan & Worcester in ‘The law and the profit’, Trade Finance, April 2000 298 Related titles from Euromoney Books International Trade and Pre-export Finance, 2nd edition Howard Palmer Publication date: 1999 The second edition of the best-selling International Trade Finance: A Practitioner’s Guide is structured as a detailed and practical guide to established and emerging techniques in successful trade finance Across nine chapters it explains the practical issues involved in the successful application of modern trade finance practices Interest areas are: trade finance, commodity finance, pre-export finance, emerging markets, structured finance Across nine chapters it details practical issues involved in the successful use of trade finance techniques including: ECA financing; Guarantees; LCs; Standby LCs; Structured LC transactions; Trade finance and pre-export financing; Forfaiting; Countertrade; Tolling; and Fraud detection and avoidance The book features expanded coverage of structured trade finance, and details 10 simple methods to avoid fraud There are also a number of standard documentation specimens including a variety of letters of credit, forfaiting terms, and escrow agreements ISBN: 978 85564 673 Price: £175/$327/€254 Oil, Gas and Energy Financing Howard Palmer Publication date: April 2011 This is the first book of its kind to be written in the aftermath of the crisis in the Middle East Oil, Gas and Energy Financing, offers a whole range of practical advice on every aspect of day to day trade financing of energy products The case studies apply to all emerging market countries drawn from the author’s 25 years’ experience in banking in and for the Middle East, Africa and FSU countries From husk-generated sales to electricity grids, renewable energy sources to hydrocarbons and hedging uranium, this book is a truly global book that will appeal to all involved in financing in and for the emerging markets This book deals with: Pre Shipment Finance Models and Examples Nuclear Power in the Emerging Markets Country Risk of Oil Producing Countries and Political Risk Insurance Back-to-Back Letters of Credit, guarantees, Forfaiting and all Financial Products Trader Financing Issues and how to avoid the ‘Joker Brokers’ Hydro-power Projects Practical solutions in Azerbaijan, Algeria, Ghana, Cambodia, Turkey, The Falklands, India, Ecuador, Uganda, Kazakhstan among many others ISBN: 978 84374 881 Price: £199/$365/€291 Commodity Finance: Principles and Practice Weixin Huang Publication date: March 2014 This book is a hands-on summary of what is happening in commodity finance, offering a macro-level framework but importantly the practice of daily operation and its problems It covers commodities, commodity markets, commodity trade and the finance of commodity trade The book is first intended for practitioners (bankers, traders and so on) who are interested in this subject and those financial institutions which have this business or plan to establish this business What are the key benefits of the book? For bankers, how to business and what risks should be watched for? For traders, brokers, institutional investors, how commodity finance is done, what bank instruments can they use? For finance academies, how is this part of niche banking handled and developed? What are the key features of the book? By presenting charts and graphs, the book tries to avoid difficult ‘jargon’ to make it accessible to a wider range of readers The content has been tested and perfected by both experts and newcomers, incorporating their comments on style and content – making this a well-rounded read Although the sequence of chapters is organised with progress along the knowledge line, the book is written, on purpose, for separate reading and reference Comprehensive global picture of commodity flows, list of commodity hedge companies and so on ISBN: 978 78137 193 Price: £175/$295/€230 All of our titles are also available as ebooks – see www.euromoneybooks.com for more details How to order: Online: www.euromoneybooks.com Email: books@euromoneyplc.com Telephone: +44 207 779 8999 Please quote code 6449 when ordering Corporate Trial Access Interested in a free companywide trial to tradefinancemagazine.com? 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By structured commodity finance we simply mean structured finance for the commodity. .. UNCTAD Expert Meeting on applications of structured commodity financing techniques for commodity- dependent countries Back in the 1990s, anyone marketing structured commodity finance still needed