GTR Trade Finance eNews - August 2012
Involvation launches supply chain workshop
Supply chain business simulation firm Involvation Interactive is launching its Cool Connection workshop at Exporta’s Asia trade finance week in Singapore on September 3-5.
Update: Van Broekhoven starts at Citi
Kris Van Broekhoven has started his role as global head of commodity trade finance at Citibank.
JP Morgan names treasury and corporate heads
JP Morgan has named Kamoltas Nalinthrangkurn as head of treasury services and Sunti Ninsuvannakul as head of its global corporate bank division in Thailand.
Turkish energy plant wins loan for plant expansion
Turkey’s Bis Enerji Elektrik Uretim has secured a US$66.3mn loan from UPS Capital Business Credit for the export of American power-generation equipment to Turkey.
Mexican wind farm receives project bond
Wind farm operator Acciona Energìa Mexico has won a US$298.7mn project bond from five international banks to repay existing bank facilities for the Oaxaca II and IV wind farms in Mexico.
DVK Group opens office in Malawi
Commodity trading company DVK Group has launched a new office in Malawi as part of its expansion plans in the Africa region.
TF director leaves NAB
Nirvikar Jain has left National Australia Bank in Mumbai to join First Gulf Bank as chief representative for India.
Tata Steel mandates banks for India's largest loan
Global steel producer Tata Steel is set to tap the syndicated market for a Re220bn (US$3.9bn) project-finance loan.
Berthier resigns from Misys
Olivier Berthier has resigned from his position as global solutions director, transaction banking at Misys.
Fiji Sugar Corporation scores landmark deal
The Fiji Sugar Corporation (FSC) has secured a €40mn structured trade finance facility with ANZ.
The loan will come with a guarantee from the Government of Fiji.
ANZ CEO for Fiji Norman Wilson says: “This is a landmark trade finance deal for the country’s sugar industry, and with continued strong global demand for agricultural commodities we’re pleased to support the reinvigoration of the industry in partnership with the government of Fiji.
He adds: “With the support of ANZ’s regional trade and agribusiness specialists, ANZ Fiji has been able to provide a local banking solution for FSC which has resulted in a reduction in borrowing costs and has provided an approach to help manage foreign currency fluctuations which affect the price of sugar.”
Macedonia rail upgrade gets EBRD backing
The EBRD is providing a 15-year €46.4mn loan to upgrade the Macedonian rail network to create a new route for trade and encourage regional integration.
BNDES joins forces for oil and gas programme
Brazil’s development bank BNDES, Petrobras and the Financier of Studies and Projects have signed a US$3bn technical co-operation agreement to support suppliers in the oil and gas industry.
HSBC names Asia GTRF head
HSBC has appointed Quang Buu Huynh as head of global trade and receivables finance, Asia Pacific (international).
VIDEO: Scipion Capital: How hedge funds add value to banks' trade finance business
Scipion Capital is an Africa-focused hedge fund created five years ago. The firm's chief investment officer, Nicolas Clavel, talks to GTR about how hedge funds are filling the commodity trade finance gap left by stringent new banking regulations, and effectively help banks keep their business despite reduced lending capacity.
Russian coal firm launches syndication
Coal company CCZ Trade has tapped the syndicated loan market for a three-year pre-export finance facility.
Amsterdam Trade Bank, who has already pledged US$50mn, is acting as the arranger, initial lender, facility agent, security trustee and account bank.
The syndication which was launched towards the end of August is hoping to raise a further US$50mn from the international market.
Fortescue back in the market
Fortescue Metals Group has once again managed to secure financing from a host of banks to cover its expansion project at Port Hedland, Western Australia.
Duferco mandates banks for syndication
Steel trading group Duferco has mandated DBS Bank, ING and Standard Chartered to launch a US$80mn 364-day syndicated revolving credit facility into the syndication market.
Abu Dhabi airport nears financial close
Plans to build Abu Dhabi's new airport terminal are underway with a Dh4bn (US$1.1bn) loan from Mashreq, First Gulf Bank, Al Hilal and Jordan's Arab Bank.
Finnvera sees increase in export credit demand
Finland’s export credit agency, Finnvera, says it has received significantly more applications for export credit than last year, despite a slight slowdown in the amount covered in H1 2012.
Rabobank US hires senior originator
Gregory Hutton has been named senior originator and executive director of Rabobank’s renewable energy and infrastructure finance Americas group.
Belarus's first nuclear power plant gets LC financing
Belarus’s first nuclear power plant has received a US$184mn letter of credit from BelVEB Bank to cover payments for the plant’s construction contracts.
Barclays makes new trade appointments
Barclays has made a number of promotions within its trade and working capital product management team in an effort to expand its current business, a spokesperson for the bank tells GTR.
China takes another step towards Rmb liberalisation
The creation of a test zone for freer Rmb transactions in the Chinese city of Qianhai could have long-term implications on trade finance in the region, industry experts tell GTR.
The Chinese government announced at the end of June that it would experiment with freer currency movements between Qianhai and Hong Kong, with the long-term prospect of opening up the country’s capital account. However, clear rules have yet to be set, and implementation of the new system is not expected before 2020.
Standard Chartered’s head of production management, east, transaction banking, Michael Vrontamitis, explains that if successful, the test could be rolled out to the rest of the country, bringing significant changes to the trade finance environment, but warns that it will take some time for that to happen.
“Relative to the size of cross-border Renminbi trade that happens between China and Hongk Kong, the Qianhai project is not going to be huge. The Chinese authorities as part of it are looking to leverage their liquidity offshore to repatriate Rmb into China to develop the region, and to lower barriers for financial institutions to set up in Qianhai. They want to support Qianhai-registered banks to be able to provide Rmb financing for offshore projects, which I think is an interesting development.
“That’s one element that’s going to be required in the longer term for capital account liberalisation – a free flow of money cross-border, but it’s not the only one. Will that help Rmb trade financing? I’m sure it will have some impact, but given the size of Qianhai, I would look at it as a test You’ll have a few transactions to start with, and it may build up over time,” he tells GTR.
He adds that even if China authorises funding of onshore projects from offshore financiers, it will keep it on a low scale with strict regulations. “Based on the past experiences, my sense is that at least initially it will be restricted, with rules around who can do it, in what amount they can do it, and there will likely be a quota system around it. Obviously if they extended this and didn’t have quotas it would have a major impact, but I don’t think that will be the short-term outlook. It's more about testing the mechanics of how the system might work, rather than the absolute amounts flowing through the system.”
DLA Piper Hong Kong associate James Willcock looks at the way China’s current account was gradually liberalised to facilitate cross-border Rmb transactions, and expects the same to happen with the capital account.
“China seems to be using the unique set-up in Hong Kong as a testing ground for the internationalisation of the Rmb, whether via the relaxation of rules concerning the current account or now with Qianhai on the capital account. Although the time frame is at the moment unclear, we probably would expect the programme to be rolled out beyond Qianhai, depending on the success of Qianhai after that’s been implemented,” he says.
However, Vrontamitis believes that if China wants to liberalise its capital account in the medium term, it will have to use other tools than Qianhai. He adds: “If you’re thinking that capital account liberalisation will happen in the 2020s then that will probably give Qianhai a lot of time to get up and running. If you’re more optimistic about capital account liberalisation and think that it might happen earlier than 2020, then the authorities in China will probably have to think of some other way to pilot some of the capital account liberalisation.”
Both Vrontamitis and Willcock warn that Qianhai will require a lot of infrastructure development before the city can be turned into a business centre, but they see the announcement as a crucial step in the internationalisation of the Rmb.
“The major blockage around invoicing in Rmb as opposed to US dollars is around education and understanding the benefits. The more these tests happen, the more it improves the knowledge around the Rmb and that’s actually vital in the longer term for corporates to be able to make a choice between invoicing in Rmb or US dollars,” concludes Vrontamitis.
Trade Technologies opens Vancouver office
Trade Technologies has set up a new sales office in Vancouver due to the dramatic increase of Canadian commodity exports to Asia.
Banks warned over fraudulent shipping documents
Banks are being urged to check shipping documents with particular caution as attempts to manipulate pre-financing have gained momentum.
The ICC’s International Maritime Bureau (IMB) has warned against a pre-financing fraud involving importers in West Africa and exporters in China, whereby false shipping documents are provided to unlock funds before goods are actually shipped.
Akbank prepares to seal syndicated loan
Turkey’s Akbank is in the process of closing a one-year US$1.5bn syndicated loan, a source at the bank confirms.
NIB funds European telecom development
The Nordic Investment Bank has granted two loans to Swedish and Russian telecom firms Ericsson and MegaFon for the development and upgrade of their mobile networks.
Metalloinvest scoops Sberbank credit line
Russian steel firm Metalloinvest has won two R50bn (US$1.5bn) three-year credit lines from Russia’s Sberbank to secure the firm’s financial stability.
Bangladesh power plant signs loan agreement
Bangladesh’s Midland Power Company has signed a US$31mn financing agreement with Standard Chartered for the construction of a gas-fired power plant.
Japan invests in Canadian shale gas
Japanese banks and ECAs have extended a multi-million Canadian dollar loan to Cutbank Dawson Gas Resources for the subscription of 40% interest in a British Columbia shale gas project.
BofAML appoints two GTS heads
Bank of America Merrill Lynch has appointed Bill Borden as head of North America product solutions and Dennis Sweeney as managing director and treasury solutions executive.
JP Morgan names FI head
JP Morgan Treasury Services has hired Lim Kiat Seng as head of financial institutions sales for Asia Pacific.
Apicorp reports boom in profits
Arab Petroleum Investments Corporation has increased its income by 24% in H1 2012 due to its reduced funding costs and increased lending activity, according to the multilateral development bank.
Apicorp’s income for H1 2012 reached US$51mn compared to US$41mn for the same period last year. The bank’s assets also rose by 18% to total US$5.12bn compared to US$4.33bn in H1 2011.
Apicorp’s first half results were bolstered by a 2012 second quarter net income of US$20mn, compared to US$2mn recorded in Q2 2011.
Ahmad Bin Hamad Al-Nuaimi, chief executive and general manager of Apicorp says: “This year, Apicorp has continued to increase the size of its medium-term committed funding that has further strengthened its capital base while continuing to support new Arab oil and gas initiatives.”
Apicorp announced a series of initiatives and transactions in the first half of this year, which include its collaboration with JP Morgan in June to expand its energy trade finance services to the Arab world and beyond.
The bank also issued its first ever syndicated shariah-compliant term loan facility. The three-year SR2.5bn (US$667mn) loan was oversubscribed by leading Saudi banks including Riyad Bank, Al Rajhi Bank, Banque Saudi Fransi and The Saudi British Bank.
Over the last 36 years Apicorp has invested, as an equity owner, in a total of 22 oil and gas joint venture projects worth in excess of US$16bn.
Additionally, the bank has participated in direct and syndicated energy finance transactions worth in excess of US$130bn; its aggregate commitments in these transactions, both in equity and debt, are valued in excess of US$11bn, the bank says.
IFC launches fast cash platform for small suppliers
The International Finance Corporation (IFC) has partnered with global trade platform TradeCard to help suppliers in emerging markets obtain cash faster and reduce capital related risk by discounting their receivables.
IFC supports Belarusian aluminium
The International Finance Corporation (IFC) has arranged a €45mn loan to support Belarusian aluminium manufacturer Alutech Group in its export expansion.
S Korea seals trade links with Russia
Export-Import Bank of Korea has increased its existing credit line with Sberbank to enhance trade flows between South Korea and Russia.
Indonesian mine gets international interest
Indonesian mining firm Aneka Tambang (Antam) has secured a US$900mn loan commitment from a consortium of international banks for the construction of a ferronickel plant in Halmahera.
Apicorp signs trade services pact
Arab Petroleum Investments Corporation has signed a trade finance services agreement with JP Morgan treasury services to expand its trade offerings to energy companies in the Middle East.
Russia's Uralkali signs PXF
Russian potash producer Uralkali has secured a US$205mn pre-export finance facility with a group of seven international banks.
Gazprom Neft gets first ECA-backed loan
Russia's Gazprom Neft has received a €258mn, 10-year unsecured syndicated loan backed by the Czech ECA for the upgrade of its Serbian oil refinery.
HSBC acted as global arranger, mandated lead arranger and lender and provided €100mn. The other mandated lead arrangers and lenders are Czech banks Ceska Sporitelna and Komercni Banka, extending €79mn each.
KfW boosts green loan quota
German bank KfW plans to extend €100bn in loans for renewable energy projects in the next five years, and to increase its environment quota from 32% to 36% in 2012.
US exports hit record high
The US trade deficit dropped by 10.7% in June, to US$42.9bn, compared to US$48bn in May.
UK trade deficit grows
The UK’s trade deficit reached £4.3bn in June, up from £2.7bn in May, the Office for National Statistics (ONS) has revealed.
IFC reshuffles trade team
The International Finance Corporation has made changes and addition to its global trade and supply chain solutions team.
Japans adds to Kazakh refinery loan
Japanese banks and export credit agencies (ECAs) have signed a US$297.5mn buyer’s credit agreement with Kazakhstan’s Atyrau refinery for the modernisation of the plant.
Barclays expects rise in European oil supply deals
Barclays anticipates an increase in demand for oil supply deals in Europe, as refineries look for ways to reduce volatility risks.
John Eleoterio, Barclays’ head of commodities structured origination, tells GTR: “Given the need for more working capital management solutions for refiners as well as their desire to reduce the commodity volatility associated with maintaining large blocks of commodity inventory, we’ve seen an increase in demand globally for a product like this.”
Mantle returns to Ashurst
Myles Mantle is set to leave SNR Denton in late August and rejoin Ashurst’s Tokyo office.
Pakistan airline gets Islamic financing
Pakistan International Airlines (PIA) has received a US$35mn Islamic structured trade finance facility arranged by Standard Chartered.
DMCC registers strong growth in H1
The Dubai Multi Commodities Centre (DMCC) has registered strong growth in the first half of 2012, with 975 new members and an increase in gold and diamond trade.
Equinox Global hires credit analyst
Equinox Global has appointed Michelle Barnes as a senior credit analyst.
DLA Piper partner leaves for SNR Denton
Michael Barz has left DLA Piper to join SNR Denton’s New York office as a partner in its corporate and business transactions practice.
US Exim signs power deal with South Africa
US Exim has signed a US$2bn deal with South Africa to fund a green energy scheme in the electricity-short country.
US backs Brazilian wind farm
Brazilian firm Wind Power Energia has won a US$32.1mn US Exim-backed loan from Bank of America for the purchase of equipment for two Brazilian wind farms.
AfrAsia restructures management team
The Mauritius-headquartered AfrAsia Bank has restructured its senior management team.
McDonough settles in at HSBC
Michael McDonough has joined HSBC as senior vice-president and head of product in North America for global trade and receivables finance.
Kenyan exports 'must' become more competitive
Kenya is under pressure to develop new products and diversify its exports to stay ahead of the competition from other African nations as well as from Asia.
The East African country has traditionally been a strong exporter of tea, coffee, fresh flowers as well as fresh vegetables and fruit, but due to factors such as high freight costs, Kenya is beginning to lose out to other countries.
“Unfortunately Kenya is losing its competitiveness to countries with lower freight costs. Egypt has effectively taken away the green bean market from Kenya,” Peter Clarke, trade and technical director, from the Fresh Produce Exporters Advisory Service tells GTR at the sidelines of a Kenyan exports conference held in London in early August.
“Kenya is also losing business to India and Pakistan who have come from nowhere in the fruit and vegetable market. There is such a lot of business going on in that part of the world. There are more flights available ensuring freight costs have become very competitive,” he explained.
Speakers at the Kenya Exports event suggested that air freight costs could account for up to 50% of the cost of Kenyan goods. There were calls from delegates for Kenya Airways to invest more in cargo planes.
Clarke tolds GTR that Kenya should try to develop a “new generation” of agricultural products to ensure its competiveness, overcome the barrier of high air freight costs and “give them a few years to profit from these developments before everyone else catches up”.
“What they should be doing is setting up an experimental garden, possibly at University of Nairobi, and trial all sorts of things and they should make that available to exporters to go and look at and then present new products to their international buyers,” he explained.
The agricultural sector in Kenya contributes 26% of the annual Kenyan GDP and accounts for 65% of Kenya’s total exports. However, it only accounts for 1% of the EU-15 market share in edible vegetables and only a tenth of the edible fruit market. The US market remains untouched by Kenyan exports.
Kenya’s traditional coffee and tea markets are also are losing out on profits due to a lack of in-country processing taking place.
Most tea is exported in bulk from Kenya and processed and packaged elsewhere. Egypt imports 21% of Kenya’s tea exports but then this tea is re-exported to other markets.
Nadeem Ahmed, chairman of global tea and commodities, argued at the conference that Kenya was missing out on increased profits by not packing its tea in Kenya.
“Kenya is the largest exporter of bulk tea in world. We need to try to bring about a system to incentivise exporters to invest money in machinery so that instead of the tea being packed all over the world, tea should be packed in Mombasa. You have the port, the tea and the infrastructure. Kenya exports around 300 million kg of tea – that is US$1.5bn of potential profit that Kenya is missing out on.”
Loise Njeru, managing director, Coffee Board of Kenya and Sicily Kariuki, managing director, Tea Board of Kenya, both appealed to UK businesses at the conference to consider setting up joint ventures with Kenyan companies to help add value to Kenyan tea exports by carrying out the packaging or processing of the tea in-country.
Export volumes for tea fell in June to 30 million kg compared to 37.7 million kg recorded in the same period the previous year, according to statistics from the Tea Board of Kenya.
Tea export volumes for the period January to June 2012 also fell compared to the same period last year, declining by 4 million kg from 212 million to 208 million kilos. Projected figures for export volumes for the whole of 2012 are estimated 420 million kg against 421 million kg in 2011.
Kenya’s coffee export earnings are expected to rise by between 5 and 10% for the 2011/12 season, according to press reports in early August.
Promoting exports is central to the Kenyan government’s plans to turn the nation into a middle income country. Following the establishment of a new constitution in 2010, the government introduced its Vision 2030 strategy. This strategy includes plans to target six priority sectors: tourism, agriculture, wholesale and retail trade, manufacturing, IT-enabled services and financial services.
Under the programme, special economic zones are being created, each one targeting a different industry. Within these zones businesses will be able to take advantage of different tax relief incentives.
Addressing the conference, Kenya’s minister for trade, Moses Wetangula, told delegates that it was now time for Kenya to be recognised as a significant economic force.
“At independence we were a better economy than Singapore, South Korea, and Malaysia. Every country has a moment of take-off in its history. I think this is the time for Kenya now to take-off.”
HSBC signs first UK-HK Rmb deal
HSBC has signed the first Rmb-denominated receivables finance deal between two non-mainland China companies – Hong Kong’s Milagros and the UK’s Debenhams.
ADB opens Myanmar office
The Asian Development Bank (ADB) has opened an office in Myanmar, marking renewed support for the country.
IFC supports Belarus exports
The International Finance Corporation (IFC) has partnered with Belarus bank Belgazprombank to support exporters from the country.
DLA Piper promotes trade finance head
DLA Piper’s head of trade finance, Charles Morrison, has been named international group head for finance and projects.
Transnet deal reaches financial close
A year and a half after being brought to market, financial close has been reached on a R864mn (US$105mn) deal for South Africa’s rail company Transnet.
The deal was arranged by Barclays, which acted as coordinating mandated lead arranger, and is being fully funded by Nedbank.
Barclays hires European trade director
Barclays has appointed Eugenio Cavenaghi as director for trade and working capital product management, Europe, starting August 1, 2012.
JBIC grants first shale oil loan
The Japan Bank for International Co-operation (JBIC) has extended a US$49mn loan to US firm JGC Exploration Eagle Ford for the production of shale oil in Texas.
HSBC conducts first Rmb transaction in India
HSBC has conducted the first Rmb-denominated trade transaction in India, marking the growing importance of the Chinese currency in world trade.
Zurich boosts trade credit insurance capacity
The North American branch of insurer Zurich has increased its trade credit insurance capacity per transaction to meet customer needs.
