Standard Chartered’s structured trade finance (STF) team has notched up double the number of deals in 2009 compared to 2008. Sanjeev Paul, head of STF at the bank, tells GTR what’s keeping his team so busy.


GTR: How did Standard Chartered’s STF team fare in 2009?

Paul: The STF team has had its busiest year ever. We added 23 professionals to the STF team in 2009 mainly in our Asian footprint in cities like Hong Kong, Shanghai, Beijing, Mumbai, Delhi, Bangalore Singapore, and Jakarta.

We already have a very strong presence in the Middle East, Africa and the Americas and with the additions in Asia, we now have a 70 person strong team with a global presence.

The number of STF transactions concluded by Standard Chartered Bank in 2009 doubled over the previous year. We financed over US$2bn globally through STF solutions in 2009 as compared to US$1bn in 2008. Approximately 70% of these deals were originated in Asia.


GTR: Why is Standard Chartered so focused on boosting its STF capabilities?

Paul: Trade finance has always been a strong area for Standard Chartered Bank and STF is a natural progression towards providing value-added structured trade solutions to clients.

The bank has a very significant client franchise in Asia, Africa and the Middle East, especially in the local corporate and commodity traders segments. The financing needs of these corporates are best met through structured trade solutions which rely not only on the financial strength of the corporate but also draw comfort from the performance track record of the borrower, nature of the contracts with off-takers and also quality of off-takers. Through our long-standing presence in these markets, in many cases for over a century, Standard Chartered Bank understands our clients well and in many instances is present at both ends of the trade transaction.

The global financial turmoil, heightened credit risk and tight liquidity market in 2009 has highlighted the need for structured risk mitigated solutions which enable capital hungry companies to raise financing through STF solutions.


GTR: Can you talk through some of the deals the STF team has worked on in 2009? 

Paul: Our team in India and Singapore closed a US$60mn structured financing solution for the Sony group company, MSM Satellite (Singapore) in March 2009. In this deal, we demonstrated how we moved away from traditional STF structures such as pre-export financing or prepayment finance.

MSM is one of the premier television entertainment broadcasting networks in India and had bought the rights to broadcast the Indian premier league cricket tournament. Through a STF line the company was able to finance the procurement of the broadcasting rights and also cover some marketing expenses.

The facility was structured against MSM’s cashflows from advertising contracts and related revenues, and therefore was able to raise financing without affecting the company’s existing cashflows.

The facility was unsecured, but came with an agreement to assign the advertising revenues of MSM from this event. This event was very successful and it was watched by millions of people across the globe.


GTR: What about China – is there interest in the STF product there?

Paul: We closed a US$10mn financing solution for Wulatezhong Qi Tianbao Mining Co, a young zinc-lead ore mining company in Inner Mongolia, China, in August 2009. This was a bilateral facility and structured around the company’s existing off-take contracts of zinc and lead concentrate.

This medium-term facility was intended to finance capital expenditure on the mine to increase its production output and yields. As a result of the financing, the client’s sales and profitability have increased.

Standard Chartered also provided a commodity price risk management solution to the client through a zinc collar hedging structure embedded in the STF facility that provided a minimum selling price for the zinc concentrate.

This structure worked to ensure that the client generated a minimum level of cashflow to repay the term loan.


GTR: Any other significant deals?

Paul: In Korea, we closed a US$150mn receivables-backed pre-delivery finance for Daewoo Shipbuilding & Marine Engineering (DSME) in September 2009. Standard Chartered acted as the coordinating bank and mandated lead arranger.

DSME is the second largest shipbuilder globally and builder of ships and offshore structures. It received an order from a strong counterparty to build and deliver an offshore Floating Production Storage Offloading (FPSO). These receivables are assigned to the lenders. Therefore, there was risk mitigation for the banks through the receivables assignment of a strong counterparty in Africa and a cash waterfall structure from the collection account.

Through the structuring which mitigated payment risk, we were able to successfully attract club banks despite adverse credit market conditions.


This edition’s GTR Asia Market View comes from Sanjeev Paul, global head of structured trade finance at Standard Chartered.
Based in Singapore, Paul is a member of the corporate finance management group, reporting to group head corporate finance, Sean Wallace. Paul has been with the bank for over 23 years. Before his current role, he was MD and regional head for local corporates business for South Asia.