Structured Commodity Trade Finance – Risk Management in Emerging Markets

Program description & objectives

This course is designed for professionals seeking insights into transactional risk management in the financing of physical flows of commodities. With a special focus on emerging markets, the program will use a combination of presentations and practical examples to emphasize key learning points and to help you gain a broader understanding of structured commodity trade finance techniques. At the end of this practical skills-based program, delegates would have gained: - A greater extensive understanding of the structured approach to trade finance. - Greater focus on considerations relating to emerging market trade finance where access to borrowers of substantial means may be restricted. - A sharper view and appreciation of the risk and commercial priorities from the perspective of a borrower as well as that of a lender. - A highly practical exposure to structured commodity trade finance.

Venues, Dates & Cost

Venues	Dublin	London	Dubai	Edmonton (CAN)	Lagos/Abuja
Dates	TBD	TBD	TBD	TBD	TBD
Cost	$3,900 per participant (USD)				(=N=)

For Whom

Trade Finance & Treasury professionals
Commercial and Merchant Bankers
International Traders
Risk Managers
Commercial lawyers

Snapshot of course content

Focus on Risk
- Overview of international trade and commodities
- Distinguishing trade finance from other forms of corporate financing
- Examining the concept of Risk and as it applies to international trade
- Understanding commodity contracts
- Risks in international trade as they apply to emerging markets
- Political, performance, operational, credit, bank, and price risks
- Illegality of contracts
- Financing trade in challenging markets
- Commodity trading – markets and players
- Evolution of the trader’s business model
- Structured trade finance and the supply chain
- Risk analysis of a commodity finance transaction
- Case study: Pre-shipment finance in Asia
- Implications of the Basel Capital Accord
- Rationale for the structured approach to trade finance
- Characteristics of good collateral
- Case study exercise: Pre-finance business proposition in a challenging environment
Focus on Pre-finance
- Risk considerations for pre-finance
- Pre-export to finance grower/producer
- Production and delivery conditions determining contract outcomes
- Push factors for pre-finance success
- Ownership of commodity assets, licenses, export quotas, foreign currency controls
- Pre-payment finance vs. pre-financing
- Limited recourse and failure to deliver
- Tolling finance, performance and country risks
- Security interests of financier and insurance solutions
Focus on Warehouse Finance
- Storage of commodities and warehousing considerations
- Business case for warehousing and bonded warehouses
- Warehouse finance vs. warehouse receipts finance
- Nature of warehouse receipts and legal infrastructure
- Case study: Distribution of imported grain
- Repo finance against commodities in liquid derivative markets
- Collateral management arrangements and liability of collateral managers
- Case studies: Sugar refining and Petroleum storage
- Case study exercise: Designing a credit line for an emerging market borrower
Subsidiary Topics in Commodity Trade Finance
- Alternative financing methods – switch trade, clearing currencies, escrow account trade
- Case study: Capital goods import
- Transport documents and Incoterms 2010
- Flag of vessel, avoiding sanctions, liner & chartered vessels
- Obligations of shipper/charterer and vessel owner
- Documents of Title and negotiability
- Cargo and marine insurance (ICC A/B/C, seller’s risk cover)
- Political and credit risk insurance: contract frustration, confiscation of assets, buyer default
- Price risk management with OTC vs exchange-traded contracts
- Link between cash and futures markets and hedging contracts
- Case study: Hedging example
Mishaps in Structured Trade Finance
- Course summary and close