International Trade

Fuel for the Global Economy

Our International Trade practice brings together an extensive network of finance and banking relationships to help our clients compete successfully around the world.  

Worldwide Commerce

Facilitating trade across the world

Overview

Key Components

Overview

International trade is expanding throughout the world – between advanced industrial economies, those economies and emerging markets, and within emerging markets. This reflects increasingly close cross-border links between economies, the dissolution of trade barriers, and the recognized benefits of trade.

Facilitating Growth

Ashton Crown helps facilitate and expand international trade by providing businesses with appropriate instruments to support their trading activities. We assist businesses gain access to financial resources by easing creditor’s risk and providing them with the necessary capital and liquidity, to better manage their cash flow, allowing them to expand and grow. We also work with our clients to manage risks associated with international trade transactions, increasing the number of options to reduce or eliminate risks associated with non-payment or payment delays, fluctuations in exchange rates, changes in trade and financial regulations and political unrest.

Fuel for the Global Economy

Trade finance provided by commercial banks, export credit agencies, multilateral development banks, suppliers and purchasers, has grown significantly over the past two decades. Trade accounts for about one half of the gross national income of developing countries, and financing that trade has become increasingly important to a country’s development prospects, as well as to manufacturers of capital goods, machinery and other products increasingly reliant on competitive export markets.

Better Finance Tools

Furthermore, payment terms are increasingly used as a competitive tool during contract negotiation as buyers would generally favor a contract that provides a higher degree of certainty and attractive credit terms. As a result, traders with access to a wide array of trade finance tools and instruments are better equipped to transact their business.

Key Components

Each structured finance transaction is unique, but key finance components include:

Pre-Export Financing
  • Assignment of export contracts, covering the deliveries of products in aggregate quantities sufficient to enable the borrower to meet its debt service obligations
  • A charge over the collection account opened by the borrower with the lending bank into which will flow all export proceeds to be applied towards debt service
  • An offtaker of the product locked in for the entire duration of the transaction by virtue of the export contract and on which the lending bank is taking payment risk
  • A Standby offtaker to replace the principal offtaker in the event of non-payment
  • A Debt Service Cover ratio providing over-collateralization, typically 120% – 150% of each debt service to allow for any small short-term commodity price fluctuations
Pre-Payment Finance
  • Similar to pre-export finance, but structurally the offtaker is the borrower, who then lends to the producer
  • Recourse to the offtaker is normally limited and dependent upon performance by the producer
  • Security structure includes:
    • Assignment over Export Contract
    • Assignment over Collection Account
    • Over-collateralization
Tolling
  • Involves financing the conversion process of raw materials into semi-finished or finished products
  • The supplier retains title to the raw materials and will be the offtaker for the refined product
  • Raw materials are delivered to the mill / refinery by the supplier
  • The ability of the processor to process raw materials and the offtaker’s payment risk are the key risk factors for the lending bank
  • The security structure is similar to pre-export transactions, and includes:
    • Assignment over Export Contract
    • Assignment over Collection Account
    • Over-collateralization