SMBC has partnered with the International Finance Corporation (IFC) to setup a US$1bn trade finance facility for emerging markets.
The risk-sharing facility will be operated under the IFC’s Global Trade Liquidity Programme which is designed to bring liquidity to smaller banks in markets perceived to be risky.
Essentially, SMBC is keen to expand its lending base around the world, and the IFC will use its large network of local banks to facilitate this. The pair will share the risk equally on the US$1bn of projects.
A statement from the IFC says: “It [SMBC] has a relatively strong liquidity position and good credit quality. While it has a significant track record in Asia with a dominant position in Japanese consumer and corporate finance, its strategy is to expand its global presence and customer base.”
It’s one of a number of deals the IFC has completed in Asia over the past number of days. It will invest US$75m in Bank Danamon of Indonesia, in order to be on-lent as an Islamic financing tool. The pair will engage in joint-lending on a murabaha trade finance facility which will see US dollars and Indonesian rupiah lent to Danamon customers in the agri-commodity sectors.
The IFC has also lent US$40mn to SRF Ltd, which it will use to develop a greenfield site in India in order to produce BOPET (biaxially-oriented polyethylene terephthalate), a polyester film made from stretched polyethylene terephthalate (PET) and used for its high tensile strength, chemical and dimensional stability, transparency, reflectivity, gas and aroma barrier properties, and electrical insulation.
Finally, the IFC is extending US$40mn in debt finance to Canadian Solar in order to expand its solar manufacturing plant in Vietnam.