GTR Trade Finance eNews - June 2012
Brazil's central bank eases pre-export loan restrictions
Foreign banks will be able to extend pre-export finance loans to Brazilian exporters after the Brazilian central bank eased restrictions that have been in place since March this year. However, loans will remain restricted to 360 days in length.
Three months ago the central bank banned foreign banks from granting pre-export finance to Brazilian exporters. Financing could only be provided by the importer or off-taker and could not exceed 360 days between the disbursement and export of the goods.
Lider Taxi gets green light for helicopter loan
Brazilian helicopter company Líder Taxi Aéreo, Air Brasil has signed a US$75.7mn loan agreement with the Private Export Funding Corporation (PEFCO) to finance the purchase of three Sikorsky Aircraft Corporation S-92 helicopters.
Turk Exim signs club facility
Turk Exim has won a one-year €224mn loan from 14 international banks. The facility will be used to fund the exports of the bank’s clients, Turk Exim tells GTR.
Techcombank wins first instalment of IFC's SME programme
IFC is providing Vietnam’s Techcombank with a US$30mn loan to increase US dollar financing for small businesses involved in trade-related activities.
Afreximbank awarded Kenya Airways financing mandate
The African Export-Impork Bank has been named mandated lead arranger to raise financing of the purchase of 20 aircraft for Kenya Airways.
The financing package consists of a pre-delivery payments facility and an aircraft delivery finance facility to fund the delivery, between Q3 2012 and Q4 2013, of nine Boeing 787-800s, one Boeing 777-300ER and 10 Embraer 190s.
UK Export Finance cover value drops
UK Export Finance (UKEF) guaranteed £2.32bn worth of exports in 2011-2012, a drop from the 2010-2011 record of £2.92bn.
VIDEO: European supply chain finance, an uncertain future
GTR spoke to experts at Exporta's Trade and Supply Chain Finance conference in Amsterdam, to determine how the supply chain finance sector is likely to evolve now that Greece has voted to stay in the eurozone.
Mexico's Pemex seals US Exim deal
US Exim has authorised US$1.2bn in guarantees and direct loans to Mexico’s national oil and gas company Petroleos Mexicanos.
The loans, provided by Crédit Agricole Securities, Goldman Sachs and JP Morgan as joint book runners, will fund four Pemex facilities, including a US$200mn loan to support exports from US small businesses and a US$100mn loan for the Cantarell project, Mexico's largest oil field.
Sberbank signs loan agreement with Russia's OMK
Sberbank has agreed a 12-year US$1.4bn loan with steel manufacturer United Metallurgical Company.
ABN Amro appoints global energy head
ABN Amro has appointed Maarten Terlouw as global head of energy within its energy, commodities and transportation (ECT) business.
Middle East banks back Emirates National Oil
Emirates National Oil Company has secured a 10-year US$100mn Islamic term financing facility from Standard Chartered Bank, Emirates NBD and Noor Islamic Bank.
US exporters are set for a rocky road
American companies' ability to win foreign sales is being challenged by the ‘dramatic rise’ of unregulated export credit programmes of export credit financing, according to US Exim.
World trade to bypass Western banks
Western banks need to find ways to participate in global trade flows that increasingly bypass developed countries, according to new research.
JP Morgan gets Apac MNC head
JP Morgan has recruited Christine Tan to head its multinational subsidiary client coverage in Asia Pacific.
StanChart banker leaves for ADCB
Krishnakumar Duraiswamy has left Standard Chartered to join Abu Dhabi Commercial Bank as head of trade finance.
Mega petrochemical deal nears close
Brazilian-Mexican joint venture Braskem Idesa is close to reaching full financing for the construction of the multi-billion Etileno XXI petrochemical plant in the Mexican state of Veracruz.
A spokesperson for Braskem tells GTR that the company expects final authorisations at the end of July, with loans from Export Development Canada (EDC) and Mexican development banks Bancomext and Nafin in the process of being signed.
Mexican airline gets Exim-backed loan
Banco Nacional de Mexico and HSBC have approved a US$171mn loan guaranteed by US Exim for the export of American aircraft and aviation services to Mexico.
VIDEO: Export finance opportunities and challenges in Sub-Saharan Africa
As exporters are being urged to explore opportunities in Sub-Saharan Africa, banks face a challenge to provide flexible trade finance solutions at competitive prices, in a market often considered as high-risk. GTR discussed the issue with banks and export credit agencies at the UKTI Aim for Africa Conference last week in London.
KfW Ipex-Bank and DEG open Singapore office
KfW subsidiaries KfW Ipex-Bank and DEG have opened a joint representative office in Singapore, in a move to further support its German customers export to Asia.
Ghana airport gets British support
Ghana Airport Company has received a UK Export Finance-backed US$35mn loan from HSBC, for the rehabilitation and expansion of the Kotoka International Airport in Accra.
Sberbank signs two trade finance deals
Russia’s Sberbank has signed two trade finance agreements with Bank of America Merrill Lynch and HSBC.
VTB Capital and BTG Pactual ink cooperation pact
Russia’s VTB Capital and Brazilian investment bank BTG Pactual have signed a cooperation agreement to explore opportunities between Russia and Latin America.
Qatar Shipping receives QNB loan
Qatar Shipping SPC has secured a 10-year US$110mn ship financing facility from Qatar National Bank.
Abu Dhabi National Energy wins jumbo facility
TAQA has signed an ECA-backed 16-year US$1.4bn debt facility for the expansion of a coal-fired power complex in Morocco.
US Exim aims to increase exports to CIS
US Exim has signed a US$1bn memorandum of understanding (MOU) with Russian bank Sberbank, to increase US exports to CIS countries.
Clyde & Co hires partner in Singapore
Law firm Clyde & Co has appointed Michael Horn as a partner in its Singapore office.
Citi signs first deal under US Exim's MTDA programme
Citi has signed its first transaction guaranteed under the US Exim’s medium-term delegated authority programme.
HSBC names Asia receivables finance head
HSBC has appointed Ricardo Elias as regional head of receivables finance for Asia Pacific in its global trade and receivables finance department.
KfW signs Indian steel production deal
KfW has extended an ECA-backed €12mn export finance loan for a medium-sized German enterprise to supply roll shop equipment to Indian company JSW Steel.
Aon Singapore CEO moves to Marsh
Gerald Lim, CEO of Aon Singapore, will join insurance broker Marsh in September, a Marsh official confirms to GTR.
Rusal gets China Exim support
Russia’s largest aluminium producer, Rusal, has signed a co-operation agreement with China’s Export-Import Bank to finance the company’s multi-million greenfield project in Eastern Siberia.
Rusal and China Exim will collaborate to fund the construction of an up to US$850mn anode (carbon electrodes used to produce aluminium) factory in the Irkutsk region, which will help meet China’s growing aluminium demand.
BTA Bank opens Rmb account with ICBC
Kazakhstan's BTA Bank has opened a Rmb account with the Industrial and Commercial Bank of China to allow Kazakh and Chinese customers to trade in tenge or Rmb directly.
US Exim gives the go-ahead for satellite launch
Australian satellite operator NewSat has won a US$280mn loan from US Export-Import Bank to finance the construction and launch of the Jabiru-1 satellite programme.
Japan supports Singaporean seawater desalination
Singapore seawater desalination firm Hydrochem has obtained a US$14.4mn buyer’s credit agreement from Japanese banks.
IHS offers short-term sovereign risk service
IHS Global Insight has launched an enhanced short-term sovereign risk service to provide analysis on the short-term creditworthiness of all 204 governments worldwide.
Finnvera renews short-term insurance scheme
The European Commission has approved a waiver allowing Finland’s export credit agency (ECA), Finnvera, to cover short-term transactions turned down by the private insurance market.
Valid until December 31, 2012, the measure means that Finnvera can provide both export credit insurance coverage to small and medium enterprises (SMEs) with an annual export turnover of under €2m, and single risk cover for transactions that do not fall under the private insurance market’s portfolio. In both cases, transactions must have been turned down by the private market before they are taken over by the ECA; a way for the EU to limit distortions of competition.
Finnvera executive vice-president Topi Vesteri tells GTR: “The need for this waiver was prompted by market failures. In the case of SMEs with a turnover of under €2m, transactions are often too small for the private market to look at; it is not economically possible for them.
“As for small capital good exports and transactions with short tenors, the private insurance market is reluctant to cover loans of over 12 months.”
He points to a gap in the EU directive restricting ECA cover to contracts of over two years, as private insurers don’t tend to take risks for loans of over 12 months, especially in small countries with a limited private insurance offering.
“Our particular problem in Finland is that we only have two active private insurers, but it is also a problem in Denmark and other small European countries.”
According to Timo Nisumaa, Finland manager at Euler Hermes, there is not a lot of demand for one- to two-year transactions, but private insurers are also limited in the number of countries they cover within this time frame: For short-term transactions of up to a year, Euler Hermes has a list of 160 countries they can operate in, but for one to two years it comes down to around 30.
Nisumaa also admits that the economic crisis has made the private sector more reluctant to cover this type of transaction. “Private insurers haven’t been very eager to offer this product at the moment, and ECAs can take more risks because they have government backing,” he tells GTR.
But although he acknowledges that transactions “need to be viable in a business sense” for the private market, he does not believe the size of exporters influences insurers’ willingness to cover them. “We have no lowest limit for transactions, but it’s all about the price exporters are willing to pay for the cover,” he says.
The European Commission is currently reviewing the rules restricting ECA activity, and Vesteri hopes for more flexibility and less bureaucracy from January 2013.
“Exporters are not getting cover, and with the eurozone situation, private insurers are reluctant to look at certain risks, whereas ECAs have a tendency to get away from the list of covers and look at contracts on a case-by-case basis. But at the moment, it takes a minimum of six months to obtain a waiver when we notice a market failure, and this is detrimental to exporters,” he adds.
However, he also urges private insurers to come up with solutions of their own, stressing that their business could suffer if importers and exporters lost the habit of turning to them for credit insurance.
Nisumaa says he is not worried about a change in behaviour, adding ECAs are a complement to the private offering, and that because the waiver will only last a few months, it will not disturb the market. “Private insurers want to grow, and there are only a few big companies, so we have to be interested in small companies. The private sector will develop a better offering for [short-term transactions], but the crisis has delayed that development,” he concludes.
Finnvera got a first waiver from the European Commission from June 2009 to the end of 2011, following the 2008 economic crises in the US, Iceland and the Baltic countries, which affected Finnish exports to these regions, particularly in the construction and automotive sectors. “With our first waiver we did a lot of business, and the result was good for exporters, and for the Finnish taxpayer,” Vesteri says.
This time, he expects the ECA to cover transactions mostly in Greece, Spain and the southern EU market.
Banco Bisa Bolivia joins IFC programme
Banco Bisa has joined the IFC’s global trade finance programme, in a move to support the trade transactions of exporters and importers in Bolivia.
BNA joins BCIE trade facilitation scheme
Argentina’s state-owned bank, Banco de la Nación Argentina (BNA) has joined the Central American Bank for Economic Integration’s (BCIE’s) trade facilitation scheme, aiming to increase trade with the region.
UAE trade minister calls for Arab-Indian FTA
UAE foreign trade minister Sheikha Lubna Bint Khalid Al Qasimi is calling for the creation of a free-trade agreement between Gulf countries and India to enhance trade between the two regions.
Uzbekistan gas gets project financing
Lukoil Overseas Uzbekistan has received a US$500mn debt financing provided by a consortium of international banks and partly guaranteed by Miga.
A total of US$300mn has been extended by BNP Paribas Suisse, Crédit Agricole Corporate and Investment Bank and the Korean Development Bank. Of that amount, US$119.5mn is guaranteed by Miga’s political risk cover.
VIDEO: Survey sparks concerns over export finance access for UK SMEs
Lack of access to export finance is the main obstacle preventing UK small and medium enterprises (SMEs) from trading overseas, according to the International Trade Survey.
GTR was at the launch of the survey on June 13 in London to talk to various experts about the reasons for this problem, and how it can be fixed.
IFC and Rabobank team up for commodity trade finance
The International Finance Corporation (IFC) and Rabobank have launched a US$500mn facility to increase commodity trade in developing countries.
CMB supports Italian exports
China Merchants Bank (CMB) has launched an Rmb2bn facility to support ECA-covered Italian exporters.
India backs East African railways
The Indian government has extended a funding grant through the AfDB’s Indian Fund Trust for the modernisation and development of railways in East Africa.
Global trade value rises by 5%
The value of international trade grew 5% in Q1 2012 compared to the same period last year, according to a World Trade Organization report.
UK SMEs need better access to finance
Lack of access to export finance is the main obstacle preventing UK small and medium enterprises (SMEs) from trading overseas.
HFW names Middle East managing partner
Law firm Holman Fenwick Willan has appointed Hugh Brown as managing partner in its Middle East practice.
New payment system launches in North America
Accord Financial has partnered with Octet Trading to provide its customers in Canada and the US with an interest-free payment system for its transactions to China.
Insurers see a gradual recovery for trade finance
The Berne Union Prague Club has released its 2011 trade credit insurance results, revealing a 25% rise in export credit insurance from 2009.
Credit insurers' claims rise by 30%
Reports that trade credit insurers are increasing their claims by up to 30% points to a deteriorating risk environment, according to members of the ICISA.
Fortescue Metals secures funding for mining project
Australian iron ore mining company Fortescue Metals Group has won a US$490mn export credit agency-backed facility from ANZ, KfW and HSBC.
Citi's Trade Advisor goes mobile
Citi has launched its latest mobile banking tool to provide clients with information on the processing status of their trade transactions.
BCC fears UK exporters will be left behind
Difficulties in accessing trade finance, red tape and a lack of strategy are all factors severely impacting export growth in the UK, according to new research by the British Chamber of Commerce.
The BCC survey reports that out of more than 8,000 UK businesses, 63% of potential exporters see access to financing as a reason not to trade overseas.
25% of companies believe that red tape, such as export licenses, is a barrier to trading abroad, and 74% of firms that are already exporting don’t have an export strategy in place.
John Longworth, director general of the BCC says: “There are still not enough of our great British businesses taking their products overseas. These results show that many firms lack an export strategy, and many only became exporters by chance. We need to find ways to make our businesses think global, and provide them with the support they need to break into new markets.”
Doing this, Longworth says, will not only help boost the UK economy, but it will demonstrate that Britain is “a major global competitor and a nation to do business with”.
Meanwhile, the survey reported that 20% of exporters are unaware or lack the knowledge of local export services and guarantee schemes, with only 3% of businesses currently using export credit agency UK Export Finance.
44% of respondents said they would be more likely to consider exporting if sales revenues deteriorated, while 56% of those already exporting said they would look to increase exports further if faced with deterioration in domestic market conditions.
Longworth believes that it is in the government’s power to give firms the confidence and encouragement they need to trade overseas. One way to do this, he adds, is by incentivising firms to take part in trade missions and adapt their products for the export market.
“Furthermore, creation of a state-backed business bank would help solve problems around access to finance, which a large number of firms said prevented them from exporting. We need to get behind our businesses and give them the support they need to drive an export-led recovery.”
Gunvor closes oversubscribed syndication
Oil trader Gunvor Singapore has closed a US$635mn oversubscribed syndicated revolving credit facility with 28 international and local banks.
The one-year facility was launched in April this year at US$470mn. Proceeds of the loan will be used to refinance the company’s existing debt and to finance its general and working capital needs.
Portuguese refinery project wins international support
Portuguese energy company Galp Energia has signed an 8.5-year €560mn Cesce-backed export credit facility with nine international banks.
JP Morgan continues Africa expansion
JP Morgan will now offer escrow services in South Africa; a move in line with the bank’s decision to expand more broadly across Sub-Saharan Africa.
Canadian exporters show optimism
Most Canadian exporters are optimistic about the global economy and plan to expand into new markets in the next two years.
JP Morgan unveils Trade Status Dashboard
JP Morgan Worldwide Securities Services has added a monitoring tool to its web-based Access platform for transactional, compliance and portfolio management information.
Coface hires Asia Pacific manager
Coface has promoted Richard Burton to manager of its Asia Pacific business.
China Exim backs Kazakh oil
China’s Export-Import Bank (Exim) has extended a US$1.1bn loan to Kazakhstan’s national oil company for the construction of a deep oil refinery.
Malaysian Exim signs Indian loan
The Export-Import Bank of Malaysia has granted a US$100mn trade finance loan to Indian bank YES, promoting Malaysian exports into the country.
Asia coal defaults rise
Thermal coal and iron ore buyers in Asia have been defaulting on their contracts since the second half of May 2012, sending prices down.
Yen-Rmb trading to cut export costs
Direct trading between the Yen and the Rmb will aid exports by reducing settlement costs between China and Japan, according to industry leaders.
QSTec signs largest Middle East solar project
Qatar Solar Technologies has secured a US$1bn loan to construct a polysilicon manufacturing facility in Qatar.
XL recruits Singapore vice-president
US insurer XL has appointed Mark Houghton as vice-president and senior underwriter of its Asia operations in Singapore.
Afreximbank supports intra-African trade
The African Export and Import Bank (Afreximbank) has signed a memorandum of understanding with the African Capacity Building Foundation (ACBF) to support intra-African trade.
JP Morgan hires treasury services head
JP Morgan has appointed Michael Sugirin as head of its treasury services for Indonesia.
Japan signs import loan with Chile
Japan has extended a US$320mn loan to Chilean copper producer Codelco to secure procurement of molybdenum oxide for Japanese steel companies.
Citi launches LatAm Rmb solution
Citi has launched a new Rmb offering to allow its clients in Latin America to issue receive and settle Rmb-denominated letters of credit with their Chinese trading partners.
Russia remains Sace's top market
Sace has announced €1.2bn worth of new operations in Russia, confirming the country’s top position in the export credit agency’s portfolio.
CIT appoints trade finance head
US bank CIT has appointed Jonathan Lucas as its new president of trade finance, effective July 2.
Coface vice-president resigns
Andrew Loh is resigning from Coface to join credit insurer Atradius as head of special products for Asia Pacific.
Trade credit insurers review their Greek exposures
Trade credit insurers are continuing to review their exposure to Greece following news that the German export insurer Euler Hermes has cut its cover to the country.
“The insurers have of course been keeping a very careful watch on all of the Eurozone countries, but until this week’s announcements we have not seen insurers walking away,” Rupert Murray, broker at Arthur J Gallagher tells GTR.
Euler Hermes made the decision earlier this week to stop issuing new cover on Greece until the situation improves. Current shipments remain covered.
A spokesperson from the French trade credit insurer Coface tells GTR that it had been anticipating the situation with Greece for some time now but is currently maintaining cover on all financially sound Greek companies.
However, the insurer says it will not be providing any new cover on Greece, emphasising that this decision was reached over several months and was a “gradual process”.
Atradius’s official statement confirms that they were reviewing their exposure on an individual basis, but for now would continue to cover Greek risks.
“We are closely monitoring developments in Greece and assessing the default risk of every Greek company, case by case.
“We continue to cover reasonable risks on new supplies to Greece. Where we anticipate a very high likelihood of future payment default by a buyer, we reduce cover. But we continue to cover reasonable risks on many buyers.”
Will Clark, head of UK trade credit at Chartis Insurance, explains to GTR that the insurer is still supporting existing clients which have Greek exposure. But he notes that the concerns in the market are widening to other southern European countries as well.
“I don’t think the main conversation is solely about Greece it is about what happens after Greece and what’s the contagion effect," he observes.
He sees new banking regulation curbing banks’ ability to lend at reasonable prices to corporates in Europe, preventing companies from generating economic growth.
“As it stands today these issues and the lack of a convincing economic strategy make the near future for Europe look uncertain and negative,” he remarks.
The trade credit insurance market came in for some criticism during the 2008-09 financial crisis for suddenly withdrawing cover on certain companies, with some arguing the decision provoked further insolvencies and forced many firms out of business.
Murray at Arthur J Gallagher argues that this time the market is assessing risks far more prudently.
“(Compared to 2008/09) a completely different approach is being taking by the majority of insurers - if it was not, they would have come out of the markets well before now. They are being much more analytical in their approach and looking at situations individually – they are not working on a carte blanche basis – they are looking at individual customers and individual policy holders before taking action.”
Update: AfDB should focus on infrastructure
AfDB should address the lack of financing in infrastructure development, according to Tanzanian President Jakaya Mrisho Kikwete.
Citi rolls out UK Rmb cash management service
Citibank has launched a UK Rmb cash management and trade solutions service to help its clients capitalise on the Chinese trade finance market.
Brazilian energy deal gets US Exim approval
Gas Verde has won a 12-year US$48.6mn loan from the US Exim to develop a biogas project in Brazil.
KEB opens Hong Kong centre
Korea Exchange Bank (KEB) has opened a global trade finance and remittance centre in Hong Kong.
