Structured Trade Finance
Structured Trade Finance (STF) is the means through which capital solutions (both funded and non-funded) are provided outside the traditional fall back on securities – the focus shifts from the “strength” of the borrower to the underlying cash flow and structures that enhance safe financing.
STF is a specialized activity dedicated to the financing of high value commodity flows. STF transactions are structured around the supply chain and commercial terms of customers, usually involving large bilateral strategic relationships. STF techniques are used largely in the commodity sector by producers, processors, traders and industrial end-users. STF can be applied across part or all of the commodity trade value chain: from producer to processor (Pre-Export Financing) to distributor, including traders who purchase and deliver commodities in the international and domestic markets (Import / Export Financing). Structured trade financing is primarily based on performance risk and hence it is particularly well suited for companies doing business in what are considered higher risk markets and industries (emerging markets) or other companies trying to control their leverage level by applying for an off-balance sheet financing.
Each financing arrangement is tailored to the particular needs of the client. Repayment of STF transactions is made through the sale/export proceeds of the commodity and can be used to finance short term working capital or long term capital expenditure up to five years.