A fund year for trade

Throughout 2006 GTR consistently highlighted the growing involvement of trade finance funds in deals, introducing an interesting new stratum of liquidity to deals. One of the newer players in this field was Rosemount Capital Management and its Rosemount Global Trade Finance Fund, launched in December 2005.

Rosemount closed a notable US$22mn syndicated structured pre-export facility in October 2006 for Brazil’s Coimex Group. What is special about this deal is not the structure but the fact that it was originated, structured and syndicated by a trade finance hedge fund. Rosemount was the lead mandated arranger. Additionally, there was another hedge fund – Latin America Export Finance fund – as a participant in primary syndication, highlighting the fact that there are alternative pools of capital that find the trade finance asset class attractive.

“This is a classic pre-export structure in which the primary risks are: export performance by Coimex, payment by offshore buyers of Coimex products, and Brazilian country risk,” states Bruce Fields, managing partner of Rosemount. “Risk mitigants for the lenders include over-collateralisation of 1.4 x export flows to debt service, assignment of export receivables, unconditional agreement of offshore buyers to pay into a collection account at a bank in New York set up to service this transaction, and a pledge to lenders over this New York collection account.”

The facility is repayable in quarterly instalments over a two-year period with first repayment of principal in nine months.

Coimex Trading is the borrower under the facility and guarantees were provided by Cia Importadora E Exportadora Coimex and Coimex Empreendimentos E Participaes, the group’s holding company. Coimex will use the funds to purchase and export soya, sugar, ethanol, meat and coffee to a pre-approved list of offshore buyers.

Rosemount was mandated lead arranger and bookrunner on the transaction. In addition, Banco Espirito Santo, Landesbank Baden-Wurttemberg and Latin America Export Finance Fund all participated as co-arrangers, with Bank of New York acting as agent.

“The facility was oversubscribed and is evidence of the emerging trend of non-traditional trade finance lenders (ie, hedge funds) working together with banks to provide debt capital to trade finance borrowers in the developing markets,” says James Klatsky, senior managing director at Rosemount.

Coimex is one of Brazil’s largest trading companies and the largest exporter of ethanol from Brazil. Through its direct and indirect subsidiaries, the company specialises in the trade of Brazilian commodities, including sugar, alcohol, coffee, grains and meat in the domestic and international markets.

Rosemount has been mandated on another, more highly structured, syndicated trade finance loan for a Brazilian soya producer and has other syndications in the pipeline in other regions of the world, claims Fields.


Deal information:

Borrower: Coimex Trading
Amount: US$22mn
Mandated lead arranger and bookruuner: Rosemount Global Trade Finance Fund
Co-arrangers: Banco Espirito Santo; Landesbank Baden-Wurttemberg; Latin America Export Finance Fund
Agent bank: Bank of New York
Guarantees: Cia Importadora E Exportadora Coimex; Coimex Empreendimentos E Participaes
Tenor: 2 years
Margin: Three-month Libor + 3.25% per yer
Law firms: Greenberg Traurig (lenders); Machado, Meyer, Sendacz e Opice (Brazilian counsel); O’Neal Webster (BVI counsel)
Date signed: October 2006