What are the common structures?
Most deals use one or more of these structures.
- Pre-export finance: a loan to a producer, repaid from future export sales to named buyers.
- Prepayment: a buyer or trader pays in advance and is repaid in product.
- Borrowing base: a revolving loan sized to the value of stock and receivables, checked often.
- Inventory and warehouse finance: a loan secured on goods held in a monitored warehouse.
- Receivables finance: a loan or sale of invoices owed by creditworthy buyers.
What do lenders check?
Lenders look at the producer's track record, the quality and credit of the buyer, the sales contract, how the goods are stored and shipped, insurance, and who controls the collection account.
They also run know-your-customer and anti-money-laundering checks on every party in the chain.
Why is it used for African commodities?
Many producers have strong output but limited access to unsecured bank loans. Linking the loan to export sales in hard currency, and to buyers in other countries, can make the risk acceptable to international lenders.
Where does Vektron Merchants fit?
Vektron Merchants is a marketing agency for energy, commodities, infrastructure financing and industrial firms. We find buyers, offtakers, lenders and partners for companies in these four industries, and we secure meetings with the people who sign.
Frequently asked questions
What is the difference between trade finance and structured trade finance?
Plain trade finance supports single shipments, often with letters of credit. Structured trade finance is larger and longer, and is tied to future production, stock, or sales contracts.
Who provides structured commodity finance?
Commercial banks with commodity desks, trading houses, specialist funds, and development finance institutions.
Related
General information, not investment, legal or tax advice. Facts are from the public sources listed and may change.