Another successful trade finance year has come to an end and a new one starts with TRADEFINANCE2020. This is exciting and new and much more than Credit Enhancement

In a typical Credit Enhancement scenario the buyer will not get the required payment instrument issued by his own bank. Most of the time, the client does not have satisfactory trading record or relation with his own bank. For such credit enhancement scenarios, we can arrange Letters of Credit or any other financial instruments, against payment of a fee. The arrangement fee depends upon the strength of the financial instrument that you seek and upon the verbiage that you require and the rating of the issuing bank we will have to employ to provide the service for you. The FRL Group has the capacity to issue instruments of any face value you may require with no upper limit, optionally emitted through prime world banks at a rate of 4% (unrated banks) and 7% (prime banks). You can find further details and the application documents HERE.

Low cost credit finance is available where a Standby Letter of Credit payment instrument is available e.g. if a Bill of Exchange or Promissory Note is secured by a Standby LC, and for the unfortunate case of non-payment, then we may be able to discount the BoE/PN on a non recourse basis. This will require the Standby Letter of Credit to be issued in favour of the funding entity. Alternatively, the instrument has to be assigned to the funding entity, with that assignment acknowledged by the Issuing Bank. In short, where we are discounting a BoE, or a PN we need to be able to claim direct on the Standby ourselves.

Clearly, we would not be interested in more conventional project finance where repayment from revenues generated from project implementation. We do not offer project finance where repayment is expected out of the project that will be built. We are however interested if repayment is expected from established and existing businesses where machinery or equipment is purchased and re-payment can be made over the medium term from an existing, running operations and the purchase is backed up by a financial instrument.

An example for equipment purchase can be the transaction of a private hospital and financing of diagnostic equipment to be imported and installed. Typical tenors for such a funding scenario can be between 3 and 5 years. Again, this would have to be backed up by a financial instrument issued by the buyer’s bank since we always look for certainty of payment, so debt will be evidenced by e.g. BoE or PN or deferred payment LC. To find out if and how your transaction qualifies and under which final terms, please submit the Evaluation Form which you can download HERE.

Wishing you a very Merry Christmas surrounded by your precious family, and sending you all the best Irish blessings for the coming year. We are at your service again starting from January 2, 2020 bringing you the very best structured trade finance solutions.

Categories: Trade Finance