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Structured Commodity Financings
In a structured commodity financing facility, we grant loans to commodities producers in emerging markets. The terms and conditions of these loans are primarily based on the supplier's ability to produce and/or deliver the commodity in question.The repayment of the loan is realised from the export proceeds, the commodities generally being sold to a buyer in an OECD country. Structured commodity financing is normally used to finance the manufacture or processing and the export of commodities, with BHF-BANK assuming all or part of the performance risk. As part of our risk assessment, we examine production sites, the supply of raw materials, the infrastructure etc. as well as the commodities producer's reputation as regards contractual performance (quality, punctuality etc.).
The following SCF funding solutions are used:
- Export pre-finance
- Countertrade finance
- Toll finance
Export pre-finance
Export pre-finance is granted to a commodities producer in an emerging market either directly or indirectly via the buyer. It thus gives commodities producers the funding they need to extract or manufacture the commodities and export them. Export pre-finance is usually used to finance exchange-listed commodities and products such as copper, cocoa, crude oil and oil products.
Apart from providing the funding, we also assume all or part of the exporter's performance risk. The facility is repaid using the proceeds from the sale of the financed goods.
Countertrade finance
Contracting partners in emerging markets sometimes want to effect payment on the basis of a countertrade. As the German company is usually required to perform in advance (in part), it is exposed to the foreign company's ability to perform. Apart from structuring the countertrade transaction, we wholly or partly settle the individual deliveries and assume all or part of the performance risk.
Toll finance
In a tolling transaction, we finance the purchase of the primary products until the processed goods are delivered. BHF-BANK assumes the proccessing and performance risk of your foreign partner to an extent that is agreed upon in advance. Toll finance is a particularly important tool in the metalworking sector.
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