Trade receivables securitisation specialist Finacity, in partnership with German bank Nordddeutsche Landesbank Girozentrale (Nord LB), has announced the launch of a trade receivables securitisation facility for container shipping company CMA CGM, allowing up to US$880mn through a syndication of five banks.
Finacity and Nord LB act as joint arrangers, with Nord LB acting as agent, funding the transaction via its commercial paper conduit Hanover Funding.
Independent managing director, Europe at Finacity, Charles Nahum, while unable to reveal the names of the five banks that form the syndicate, tells GTR that most global banks are willing and able to participate in receivables securitisations arranged by Finacity in the freight and container shipping sector.
“The space is very cyclical and this is a steady, solid form of funding in terms of providing access to working capital,” he tells GTR. “[Finacity] has three live facilities in the space with a fourth that will probably be in place by early 2015.”
Finacity has three live facilities in the space with a fourth that will probably be in place by early 2015.
Asked about the attractiveness of this form of funding, Nahum says that it can often offer the best, most cost effective way to maintain high liquidity against an asset whilst ensuring its security. “Once you’ve paid the initial costs; sovereign costs, legal costs and audit costs, for example, the ongoing running costs [of the facility] are very low,” he tells GTR.
“There are a number of shipping companies that are now interested in this type of structure because it’s the one that will definitely remain in place,” explains Nahum.
“If a shipper has to go through financial restructuring or falls into administration, a lender isn’t worried because the assets are ring-fenced. We’ve seen a number of cases of this, where the one structure that keeps going is the securitisation [of receivables].”
The multijurisdictional benefits of maritime law mean that such a facility can be enforced virtually anywhere. Nahum confirms this facility covers jurisdictions throughout Europe, Asia and the Americas.