Structured trade finance (STF) is a highly specialised area of trade finance that has evolved directly from practice. As it grows and becomes more complex in an increasingly risk-based regulatory environment, there is a need for more detailed guidance on the subject. Now in its second edition, Foundations of Structured Trade Finance provides exactly this. Written by Dr Benedict O. Oramah, president of Afreximbank and a professional who has played an important role in the evolution of STF, this book: •Addresses the philosophical foundations and risks associated with structured trade finance;…mehr
Structured trade finance (STF) is a highly specialised area of trade finance that has evolved directly from practice. As it grows and becomes more complex in an increasingly risk-based regulatory environment, there is a need for more detailed guidance on the subject. Now in its second edition, Foundations of Structured Trade Finance provides exactly this. Written by Dr Benedict O. Oramah, president of Afreximbank and a professional who has played an important role in the evolution of STF, this book: •Addresses the philosophical foundations and risks associated with structured trade finance; •Provides step-by-step guidance on how deals can be structured; •Outlines the scope of coverage outside the confines of commodities; and •Examines real life case studies and draws out lessons to be learned.
Foreword vii by H. E. Nana Addo Dankwa Akufo-Addo, President of the Republic of Ghana Foreword to the first edition ix by Jean Louis Ekra, former president of African Export–Import Bank About the author xiii Acknowledgments xvii Chapter 1: Introduction 1 Trade and development: evolving historical context and implications 1 Purpose and outline of this book 8 Chapter 2: Trade finance flows to developing countries 11 The need for trade finance – a theoretical context 11 Trade finance flows to developing countries – a brief historical review of the African case 17 The historical review 22 Trade financing gap and opportunities for structured trade finance 36 The future of trade and trade finance in Africa 39 Chapter 3: Structured trade finance – conceptual foundation, origins, and definitions 61 Conceptual foundation 61 The origins of structured trade finance 66 Definitional issues 69 Chapter 4: Essential steps in structured trade finance 73 Collateralization of credit 73 Structured trade finance: essential steps and building blocks 75 Chapter 5: Structured trade finance in action – typical commodity-type deal structures 89 Traditional structures 89 Chapter 6: Deviations from typical commodity-type trade finance deal structures 115 Situations where an exporter’s performance risk is weak 115 Warehouse receipt financing 116 Financing with performance guarantees 128 Financing on credit of buyer (full recourse pre-payment finance structures) 133 Financing imports into sub-investment grade economies 153 Special considerations in structuring import financing into sub-investment grade markets 158 Emerging import financing deal structures 162 Chapter 7: Extension to non-physical commodities 195 Pre-financing commoditized revenue flows 195 Migrant remittances financing 198 Trade payment flows financing 207 Chapter 8: Introduction to reserve-based lending and supply chain finance 221 Reserve-based lending 222 Supply chain finance 239 Chapter 9: Pricing structured trade finance transactions 255 Determining the lending rate/loan price 255 Considerations in establishing a pricing model 256 Analysis of loan pricing models 257 Some considerations in applying pricing models 270 Basel III: impact on structured trade finance and loan pricing 271 Chapter 10: Operational risk issues in structured trade finance 279 Definition 279 Susceptibility of structured trade finance to operational risks 279 Importance of operational risk considerations in structured trade finance 279 Sources of operational risk in structured trade finance transactions 284 Managing operational risks in structured trade finance 294 Chapter 11: Living the structure – lessons from real-life experience 299 The good 299 A revolving export receivables-backed dual tranche financing facility for a cocoa processing entity 327 The difficult and challenging 350 Conclusion 402 Chapter 12: A new technology for implementing structured trade finance 405 Technology and the future 405 Digitization of structured trade finance 406 Conclusion 417 Chapter 13: Final thoughts and concluding remarks 419 About Globe Law and Business 421
Foreword vii by H. E. Nana Addo Dankwa Akufo-Addo, President of the Republic of Ghana Foreword to the first edition ix by Jean Louis Ekra, former president of African Export–Import Bank About the author xiii Acknowledgments xvii Chapter 1: Introduction 1 Trade and development: evolving historical context and implications 1 Purpose and outline of this book 8 Chapter 2: Trade finance flows to developing countries 11 The need for trade finance – a theoretical context 11 Trade finance flows to developing countries – a brief historical review of the African case 17 The historical review 22 Trade financing gap and opportunities for structured trade finance 36 The future of trade and trade finance in Africa 39 Chapter 3: Structured trade finance – conceptual foundation, origins, and definitions 61 Conceptual foundation 61 The origins of structured trade finance 66 Definitional issues 69 Chapter 4: Essential steps in structured trade finance 73 Collateralization of credit 73 Structured trade finance: essential steps and building blocks 75 Chapter 5: Structured trade finance in action – typical commodity-type deal structures 89 Traditional structures 89 Chapter 6: Deviations from typical commodity-type trade finance deal structures 115 Situations where an exporter’s performance risk is weak 115 Warehouse receipt financing 116 Financing with performance guarantees 128 Financing on credit of buyer (full recourse pre-payment finance structures) 133 Financing imports into sub-investment grade economies 153 Special considerations in structuring import financing into sub-investment grade markets 158 Emerging import financing deal structures 162 Chapter 7: Extension to non-physical commodities 195 Pre-financing commoditized revenue flows 195 Migrant remittances financing 198 Trade payment flows financing 207 Chapter 8: Introduction to reserve-based lending and supply chain finance 221 Reserve-based lending 222 Supply chain finance 239 Chapter 9: Pricing structured trade finance transactions 255 Determining the lending rate/loan price 255 Considerations in establishing a pricing model 256 Analysis of loan pricing models 257 Some considerations in applying pricing models 270 Basel III: impact on structured trade finance and loan pricing 271 Chapter 10: Operational risk issues in structured trade finance 279 Definition 279 Susceptibility of structured trade finance to operational risks 279 Importance of operational risk considerations in structured trade finance 279 Sources of operational risk in structured trade finance transactions 284 Managing operational risks in structured trade finance 294 Chapter 11: Living the structure – lessons from real-life experience 299 The good 299 A revolving export receivables-backed dual tranche financing facility for a cocoa processing entity 327 The difficult and challenging 350 Conclusion 402 Chapter 12: A new technology for implementing structured trade finance 405 Technology and the future 405 Digitization of structured trade finance 406 Conclusion 417 Chapter 13: Final thoughts and concluding remarks 419 About Globe Law and Business 421
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