TXF Global 2022: Export, Agency & Project Finance
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As state oil company Sonangol faces a severe balance of payments crisis and foreign investors threaten to seize Sonangol’s revenues for their benefit, the ruling family is increasingly likely to exert its influence over the local banking sector to pressure lenders to bail out the distressed national champion.
Commodity trader Trafigura has sealed a renewal of its metals borrowing base with an facility. A recent rally in the price of base metals and the streamlining of its business model in the sector has helped the commodity house secure its latest financing.
Trafigura subsidiary Galena’s commodity trade finance fund is set to expand its product offering following its takeover by EFA Group. The Singapore-based company takes over as the investment manager of the fund with their access to Asian markets set to expand alternative trade financing in the region.
Long associated with the Russian market, Gunvor has made large strides in recent years to refocus its global activities. Following the purchase of a Rotterdam refinery earlier this year the Swiss trader has secured structured financing for its European operations.
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Donald Trump’s election last Tuesday may have only surprised pollsters but there was a mixed reaction in the trade financing space. The potential effects of Trump’s mooted policies will be felt across world trade and could potentially spell trouble ahead for the industry.
This year Exiar has doubled its volume of insured exports compared to 2015 as an expanded government mandate begins to bear fruit. Max Thompson investigates the driving forces behind the increase as US and European sanctions continue to force Russia to diversify its economy away from oil and gas.
Despite a poor season earlier this year, global demand for cocoa remains high. One of Côte d’Ivoire’s largest grinders has secured a PXF with British Arab Commercial Bank in a financing which comes amid challenging environmental conditions for exporters in the region.
As the dazzling array of online trade tools and products continues to evolve, the diverse world of trade and commodity finance has begun to seek out digital solutions to help tackle efficiency and some complex problems. Commodity traders have operated with traditional methods for decades but research suggests they too will have to adopt digital opportunities to stay competitive in the future.
Reduced growth forecasts for global trade from the WTO has caused consternation among businesses and economies as the gloomy outlook sees trade flows dip below GDP growth. However, the trade finance market has retained its confidence for now as macro-economic changes seemingly fail to have an impact on the industry.
Iran suffered massively from the economic sanctions imposed by the United States and the European Union. The Iranian oil and gas industry was especially badly impacted, with oil revenues collapsing from approximately $118 billion dollars (2011) to around $42 billion (in 2013).
Over the past two years, Brazil has suffered from its worst recession since the 1930s. However, since the appointment of conservative President Michel Temer, Latin America's largest economy has started to rebound with positive forecasts for 2017.
When the famous Scottish novelist Robert Louis Stevenson opined, “Don't judge each day by the harvest you reap but by the seeds that you plant,” he encapsulated the need for long-term thinking and deliberation over both moral issues and the value of planning ahead. Today’s agricultural market faces significant challenges through population growth and climate change but efforts made today could help feed the world of tomorrow.
Commodity trader Trafigura has taken big steps into the Indian market with their downstream acquisition of Essar Oil alongside sanctioned oil producer Rosneft. The strengthening relationship between Russia and India provides a backdrop to a deal which further demonstrates the potential of the Indian sub-continent to provide value in a low oil price environment.
Despite Ukraine’s turbulent times, the agricultural sector has survived and prospered as the country looks to make business more attractive. A recent PXF could signal Ukraine’s return to prominence as the world looks to utilise its vast agricultural capacity.
Commodity houses have seen a difficult year for trading as a prolonged slump in prices without the contango opportunities that existed in 2015 has seen them look to find value in alternative markets. Efforts to refocus their business interests has seen a change in geographic exposure and commodity types.
Despite being below investment grade, Brazil’s largest oil company appears to have retained market confidence amid an ongoing political scandal and repeated allegations of corruption. The appointment of a new chief executive and ambitious plans to improve the company’s debt position may hint at better days to come for the beleaguered giant.
Secured financing for commodities, particularly the borrowing base, took a hit following the acrimony of the OW Bunker scandal and its subsequent fall out. Lenders have cited a trust issue permeating the facility’s use but borrowing bases could still be the facility of choice among banks who take steps to improve structuring.
An increase in compliance issues in international banking in the wake of damaging public exposures and scandals has demonstrated the importance of regulation in the industry. Banks and compliance departments need to find a more symbiotic relationship to improve the current shifting landscape and its challenges for global financing.
The Chinese government’s change in rules dealing with foreign investment offshore could see an increase in international bank financing in the country. Fangyuan Group’s recent pre-delivery facility was mandated ahead of the regime change in May and could set the tone for the foreign financing of Chinese producers in the future.
In a ground-breaking transaction for Ghana, HSBC and Standard Chartered Bank have issued a $500 million stand-by letter of credit on behalf of Ghana National Petroleum Corporation to make payments for natural gas deliveries. The transaction is related to gas supplies from Ghana’s Sankofa gas field and will be transformational in the development of power generation within Ghana.
Russia’s Norilsk Nickel has signed a five-year $500 million committed revolving back-stop credit facility (RCF) with a group of international banks. The transaction is on an unsecured basis and is new money, shining a positive light on the Russian market.
Falling commodity prices have caused shortages in dollar funding for African producers and has led to a greater demand for trade financing from local SMEs.