Structured Trade & Commodity Finance

Course Overview 'Structured Trade and Commodity Finance' is designed for professionals interested in risk management and financing of physical flows of commodities. The course is intermediate level. You should be knowledgeable about trade finance products, letters of credit and international trading practices. Coverage will tilt towards financing of emerging markets business. Case studies and real-life illustrations will be used frequently to emphasise learning points. Summary of course content The structured approach to trade finance Considerations relating to emerging market trade finance Risk and commercial priorities from the perspective of a borrower as well as that of a lender Contracts, structures and documentation related to prefinance and post-finance Warehousing and collateral management Other alternative financing aspects Register Methodology Use of a mixture of presentations and many practical examples so you can gain a comprehensive understanding of structured trade and commodity finance Practical approach to teaching by using case studies and real life illustrations to emphasise the key learning points You will have the opportunity to apply the skills acquired during the programme in practical sessions and group exercises Who Should Attend? Designed for all those who wish to learn how to analyse and structure trade and commodity finance indepth. We highly recommend the following market professionals attend: Trade Finance & Treasury professionals Commercial and Merchant Bankers International Traders Risk Managers
Day 1: Emerging markets Risks in international trade as they apply to emerging markets Political risk Performance and operational risks Credit and bank risks Price risk Illegality of contracts Document of title Case study Financing trade in challenging markets Commodity trading - markets and players Evolution of the trader’s business model Structured trade finance and the value chain Risk analysis of a commodity finance transaction Case study Case study Other considerations Implications of Basel Capital Accord Rationale for the ‘structured’ approach to trade finance Characteristics of good collateral Day 2: Contracts, structures and documentation Key documentation considerations Transport documents Documents representing goods Title, negotiability and endorsements Documents of title Incoterms Charter-party contracts Obligations of shipper / charterer and vessel owner Loading and discharge of cargo Case study Risk considerations for pre–finance Pre-export Application of Green Clause Credits Risks relating to grower / producer finance Valuing producer risk Ownership of the commodity / asset Licenses, export quotas, foreign currency controls Case study Risk considerations for post-finance Pre-payment Application of Red Clause Credits Limited recourse Absence of obligation to reimburse upon failure to deliver Difference between pre-financing and pre-payment Case study Day 3: Structured finance Warehousing considerations What is an asset-backed structure? The business case for warehousing Problems with pledges over inventory stocks, physical dispossession Legal infrastructure required to support warehouse receipt finance Is a WH receipt a title document or only evidence of receipt? Case study Financing issues with warehousing Warehouse receipts finance WRF structures Raising finance against warehouse receipts-backed securities Case study Collateral management Collateral Management Agreement (CMA) Liability of collateral managers Negotiating CMA documents CMA components Review of a CM Agreement Mishaps in collateral management arrangements Case study Tolling finance Performance and country risks Causes leading to non-delivery by processor Security interests of financier Insurance solutions Day 4: Alternative financing Types of other financing structures Other financing structures Switch Clearing currencies and escrow account Receivables-backed finance Case study Insurance issues Principles of marine insurance ICC A/B/C, contingency cover Security over insurances (assignment vs. loss payee) Why do banks need political risk insurance cover? Contract frustration Confiscation of assets Credit insurance Covering risk of default in payment by buyer Legal traps Breach of warranty Failure to act as if you were uninsured Price risks Price risk management in commodity trade Price discovery exchange Traded vs. OTC Link between cash and futures markets Understanding contracts to hedge Benefits / Advantages for the customer and the bank Case study Course summary and close