International Structured Trade & Commodity Finance - The Circle of Opportunity
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Beschreibung
“Dr. Kirchmayrs´ book, International Structured Trade & Commodity Finance “STCF”, is a comprehensive state-of-the art introduction to STCF. By using a thoroughly analytical approach, the author succeeds in providing in depth insights into both the fundamentals and the techniques of STCF. A number of carefully selected case studies, based on the author´s ample professional experience in this field, give the reader a step by step insight as to how STCF problems can be dealt with and solved in practice. Those readers less familiar with International Trade will welcome supplementary chapters on commodity markets, INCOTERMS, documentary credit techniques, hedging and other technicalities required for successfully managing STCF.
The admirably well written monograph truly fills a gap in a hitherto regrettably neglected area of managerial decision making: It can be warmly recommended to all practitioners as well as to those academics working in the field.“
o.Univ.Prof. Dr. Edgar Topritzhofer
Vienna University of Economics and Business Administration
“This book combines theory and practice in an easily understandable way and gives an excellent overview of the variety of financial solutions in commodity trade finance to both experts and newcomers.“
Dr. Angelo Rizzuti
Global Head of Structured Trade & Export Finance - Unicredit Group
“I strongly recommend subject monograph to the participants at all levels of the “STCF - Circle of Opportunity“, and particularly to those who want to play a more important role. To those who want to delve into this area, I encourage you to not only read “STCF - Circle of Opportunity”, but to discuss and share the specific topics with your colleagues.“
Univ.Prof. Dr. Aleksej Evgenevich Nikiforov
CFO - Byelorussian Steel Works
“Substantial credit facilities must be extended in order for International Commodity Trading firms to finance their transactions to a successful conclusion. A major portion of such funding continues to be provided by banks in the form of structured trade transactions. The publication “STCF - The Circle of Opportunity” sets forth and establishes, in a unique practical manner, the requisite Know How to insure that the Circle of Opportunity possibility indeed becomes a reality.“
Dr. Jugendra Raghav-Singh
Chairman of the Stork Group
Preface 11
Introduction to STCF
1.1. The Purpose and Mission of STCF 18
1.2. STCF Considerations Lending and Repayment Prospects 23
1.3. Differing Lending Philosophies 28
1.3.1. Balance Sheet Lending 28
1.3.2. Cash Flow Lending 36
1.3.3. Asset Backed Lending 43
1.3.4. Mix of Lending Philosophies 45
1.4. Classical Financing Structures versus STCF Patterns 48
1.5. STCF - Potential Participants - Potential Structures 52
1.5.1. The Circle of Opportunity 52
1.5.2. Commodity Producer 55
1.5.3. Off Taker/Trader 55
1.5.4. Final Buyer/End User 56
1.6. Relevant Factors and Considerations - Due Diligence 57
1.7. Most popularly used Financing Structures 60
1.7.1. STCF Modular System 60
1.7.1.1. Module: Pre (Export) Financing 62
1.7.1.2. Module: Warehouse and Transport Financing 66
1.7.1.3. Module: Tolling Financing 68
1.7.1.4. Module: Accounts Receivable Financing 70
1.7.2. The Barter Structure 76
1.7.3. The Countertrade Structure 78
1.7.4. The Securitization Structure 81
1.8. Conclusion 85
Commodities
2.1. Commodities and Raw Materials 89
2.1.1. Metals 90
2.1.2. Energy 92
2.1.3. Softs 93
2.1.4. Others 94
2.2. The Development of Commodity Trading 95
2.2.1. Overview 95
2.2.2. Medium of Exchange, the role of Metal as Money 96
2.2.3. The Concept of a Location for the Exchange of Goods 97
2.2.4. Futures Trading as the Backbone of Modern Day C ommerce 99
2.3. Conclusion 102
STCF Characteristics and Risk Consideration
3.1. Categories of Risk in the Context of STCF 111
3.2. Evaluation of Performance and Payment Risks 118
3.3. Payment Security Methods 120
3.3.1. Open Account 122
3.3.2. Draft/Bill of Exchange 122
3.3.3. Documentary Collections 124
3.3.4. Letters of Credit 126
3.3.4.1. Revocable Letter of Credit 128
3.3.4.2. Irrevocable Unconfirmed Letter of Credit 128
3.3.5. Bank Guarantee 129
3.3.5.1. Direct bank guarantee 130
3.3.5.2. Indirect bank guarantee 131
3.3.5.3. Standby Letters of Credit 135
3.3.6. Irrevocable Confirmed Letter of Credit 136
3.3.7. Cash in Advance 136
3.4. Frequently used Letters of Credit in STCF structures 137
3.4.1. Silent Letters of Credit 137
3.4.2. Back-to-Back Letters of Credit 137
3.4.3. Red and Green Clause Letters of Credit 138
3.5. INCOTERMS - International Commercial Terms 142
3.6. Risk inherent to the Off Taker/Trader and Buyer/End User 147
3.6.1. Assessing the Off Taker/Trader 148
3.6.2. Assessing the Buyer/End User 148
3.7. Hedging of Commodity Transactions 152
3.7.1 Derivative Instruments 153
3.7.2. Futures 155
3.7.3. Options 160
3.7.3. Swaps 164
3.7.4. Caps/Floors 165
3.8. Sources of Security/Collateral 166
3.9. Danger Signals 170
3.10. Conclusion 173
Case Studies
4.1. Case 1 - Transport and Accounts Receivable (“A/R”) Financing (Cotton) 177
4.1.1. Transaction Background and Purpose 177
4.1.2.Pertinent Details 177
4.1.3. Transactional Graph Details 178
4.1.4. Risk Analysis 181
4.1.5. Conclusion 182
4.2. Case 2 - Pre-Export Financing (Steel) 183
4.2.1. Transaction Background and Purpose 183
4.2.2. Pertinent Details 183
4.2.3. Transactional Graph Details 184
4.2.4. Risk Analysis 186
4.2.5. Conclusion 187
4.3. Case 3 - Tolling Financing (Oil – Oil Products) 189
4.3.1. Transaction Background and Purpose 189
4.3.2. Pertinent Details 189
4.3.3. Transactional Graph Details 190
4.3.4. Risk Analysis 193
4.3.5. Conclusion 194
4.4. Case 4 - Red Clause Letter of Credit Financing (Aluminium) 195
4.4.1. Transaction Background and Purpose 195
4.4.2. Pertinent Details 196
4.4.3. Risk Analysis 198
4.4.4. Conclusion 199
4.5. Case 5 - Mix of Lending Philosophies (Paper) 200
4.5.1. Transaction Background and Purpose 200
4.5.2. Pertinent Details 200
4.5.3. Transactional Graph Details 201
4.5.4. Conclusion 204
General Conclusion 206
List of Graphs 209
Bibliography 211
Abstract 217
Autor*in
Rudolf Kirchmayr