What is Structured Trade & Commodity Finance?
This is a specialised activity dedicated to the financing of high-value supply chains. Every loan is tailor-made to client, transaction and region. They tend to be more long-term – sometimes up to five years.
Structured trade finance usually refers to the financing of cross-border commodity flows (and as such is most commonly known as structured commodity finance).
Structured commodity finance encompasses several different methods of finance for producers and traders of goods and commodities, including:
Pre-export finance (PXF): offering a company a means of raising money by using its export contracts as collateral
Borrowing base facilities: working capital credit facilities that are secured by current assets
Revolving credit facilities (RCF): A type of borrowing base facility which the borrower (usually a big commodity trading house) can draw from and pay back as needed, benefiting from extra flexibility
Warehouse financing: A loan made to a producer or processor with goods or commodities held in a warehouse as collateral (security). The goods can be held in a public warehouse approved by the lender or in the borrower’s warehouse, but managed by a third party (a collateral manager).