Advanced Structured Trade & Commodity Finance

Part One

Session 1: The Markets

• US Trade Policy and the liberal use - and withdrawal - of tariffs

• Global Trade in the current political climate

• A high-level overview of: The markets

• Commodities

• The key players

• Producers

• Merchants

• Processors

• Transportation Services

• Insurers

• Banks

• Specialist funders

• General Trade Finance overview

Current Trends

Session 2: Global Players

• Who are the key players?

• The Key sectors: Agri & Food

• Oil & Gas

• Power

• Mining & Metals

• The rise of Green commodities

What are the key risks involved?

How do traders make money?

Who are the main providers of finance?

Strategic activities of key merchants?

Commodity Finance Training Case Study: You will consider the rise and fall of a leading commodity trader and establish what risks can be identified with the benefit of hindsight and what lessons can be learned.

Session 3: Financing Techniques

• Open Account

• Collections

• L/C’s

• Escrow and advance payments

• Receivables and Invoice Discounting

• Innovations: Reverse factoring

• Buyer-centric solutions

• Seller-centric solutions

• Forfaiting

• UPAS

What are the risks?

What are the attractions?

What is a “good” structure and what makes it “good”?

Case study: An example of an emerging market deal

Session 4: Supply & Value Chains

• Following the Value Chain

• Risks, mitigants & controls

• Opportunities, strengths & attractions

• Upstream, midstream & downstream structures

• Pre-financing, pre-payment, and tolling structures

• Country risks

• Counterparty risks

• Bank risks

• Ownership & Control issues – the value of a trust deed

• Licenses, export quotas, currency controls, tariffs, and other barriers

• Recourse: Full

• Part or limited

• Non-recourse

What can go wrong? The signs and the mitigants

The role and value of security

The role and value of insurance solutions

Case study: Real Life Example of a traditional pre-payment structure

Session 5: Risk Management

• Using documentation: Contracts – Financial & Commercial

• Tri-party agreements

• Liquidated damages

• Transport documents

• MMTD & BoL’s

Understanding price mechanisms

Hedging techniques

Assessing the trading book and its inherent risks

Financing Initial and Variation Margin

Advanced structured trade and commodity finance course case study: Example of an RBL

Part Two

Session 6: Financing Commodities

• Inventory finance

• Borrowing Base

• Warehouse Finance – the risks in practice

• Repurchase agreements – pros & cons

• Commodity contracts

• Risk analysis of commodity flows

• Risk analysis of key parties

• Advanced structured trade and commodity course case study: Example of a borrowing Base Facility

Session 7: Due Diligence & Monitoring

• The various options

• Risk-based approach

• Assessing key risks

• Considering key risk mitigants: Performance risks

• Country risks – confiscation, embargo, currency, etc.

• Corporate risks – financials, cash flow, borrower, supplier, logistics, etc.

• Payment risks

• Trade instrument risks

• ‘Legal risks – jurisdiction and local law

• Anti-money laundering (AML) risks

• Sanctions risks

Loan origination, appraisal, approval, and commitment processes

Syndications, forfeited, and other shared facilities

Monitoring and control options

Commodity Finance Training Case study: Major commodities in Indonesia and Europe

Session 8: Innovation

• Blockchain

• DLT

• AI & Machine Learning

• What are the advantages?

• Game changers or a “flash in the pan”?

• What are the risks?

• What has happened in practice?

• Case study: A blockchain example

Session 9: Non–Bank & Other Specialised Lenders

• What are the alternatives?

• Commodities Funds

• Mezzanine Finance

• How can banks work with these lenders?

• IFC, World Bank. USAID

• ECA’s

• Case study: Considering the consequences of pushing innovation to the limit. What went wrong, why, and how could it have been spotted/prevented?

Session 10: Mores Specialist Commodities

• Protein

• Green

• Aquaculture

• Strengths and Weaknesses

• Opportunities and threats

• Mitigants

• Attraction of participating

Session 11:  Price Risks

• US Policy - a big influencer on energy and commodity

• Traded versus OTC

• Cash and futures markets

• Contracts to hedge

• Bank vs customer requirements/benefits

Session 12: Commodity Finance Online Course Open Forum & Conclusion

Training Objectives

Commodity training courses at Redcliffe cover the following:

• Challenges and risks of managing physical commodities all along the value chain, including producers, merchants, processors/consumers, as well as the various stakeholders

• Enhance and develop an advanced knowledge of today’s Commodities markets.

• Participants, lending structures, risks, and mitigants, as well as innovation trends

• Options for an appropriate degree of due diligence

• Recognise that the risk profile and the due diligence requirements can be omitted by counterparties, the context, the value chain, and the lending structures

• The relative strengths and weaknesses of structured deals (from bilateral transactional to more complex syndicated facilities)

• The pros and cons of technology innovations and solutions in STCF: blockchain, DLT, AI, and machine learning

• Understand that as a risk mitigant, structured commodity trade finance is all about creating the right balance between risk and reward

Training Course Summary

We approach our commodity training courses from an advanced level. We consider what structured trade finance means in practice and to what extent it can be applied. Most lenders have only three or four broad client segments: Global and Investment grade clients, large corporates, the rest, and SMEs. When it comes to structuring, each sector requires a different approach because risk and reward characteristics vary considerably.

Commodity markets have seen unprecedented price fluctuations in recent times, making the sector much more challenging. Several previous market leaders have withdrawn from some sectors completely. This commodity finance course will explore these challenges and ultimately recognise that the whole sector remains inherently riskier than it was.

This highly interactive, structured trade and commodity finance training will examine and explain the key concepts involved in structured trade and commodity finance at an advanced level. It is not a suitable workshop for beginners.

Whether you seek a refresher or a detailed overview, we are certain our commodity finance course can help you and will help add value to your skill set.