Key Terms: Trade Finance and Structured Commodity Trade Finance

Important. This document presents indicative financing parameters for discussion purposes only. Final structure, pricing, availability, security, and documentation are subject to underwriting, credit approval, due diligence, legal review, and prevailing market conditions.

Key Terms: Trade Finance and Structured Commodity Trade Finance

Indicative ranges and structures for contract-based finance, structured commodity trade finance, letters of credit, standby letters of credit, bridge loans, and junior capital. Final terms depend on counterparties, collateral, jurisdiction, and market conditions.

Products Covered
  • Contract-based or prepayment finance against offtake or supply contracts
  • Structured Commodity Trade Finance covering inventory, transit, and receivables
  • Documentary Letters of Credit issuance and confirmation
  • Standby Letters of Credit issuance and confirmation
  • Bridge loans for shipment gaps and closings
  • First-loss capital injection as sponsor or third-party junior tranche
Facility Size USD or EUR 2,000,000 to 100,000,000 per borrower group. Single transactions from 1,000,000.
Tenor
  • Contract-based and SCTF: 60 to 270 days per cycle. Extendable to 360 days.
  • DLC: 90 to 360 days, sight or usance.
  • SBLC: typically 12 months plus 1 day.
  • Bridge loans: 1 to 12 months.
Advance Rates
  • Eligible receivables: 70% to 90%.
  • Inventory in bonded or approved warehouses: 70% to 85% with collateral management agreement.
  • Inventory in transit: 60% to 80% against acceptable title documents.
  • Against confirmed DLC or SBLC proceeds: up to 90% of face value.
Pricing
  • Contract-based and SCTF: SOFR or EURIBOR plus 6.0% to 12.0% per annum. Floors may apply.
  • DLC issuance: 0.75% to 2.00% per annum of face value. Confirmation 0.25% to 1.00% per 90 days.
  • SBLC issuance: 1.50% to 4.00% per annum of face value. Confirmation as quoted.
  • Bridge loans: 1.25% to 2.50% per month. Original issue discount 1% to 3%.
  • First-loss capital: 10% to 30% of facility as junior tranche. Economics case by case.
Fees
  • Arrangement: 1.5% to 3.5% of facility.
  • Commitment on undrawn amounts: 0.50% to 1.00% per annum where applicable.
  • Agency and monitoring: quoted per transaction or per month.
  • Legal, due diligence, KYC, inspections, and SWIFT: at borrower cost.
Security Package
  • Assignment of contract proceeds and receivables.
  • First-ranking pledge over goods, warehouse receipts, and title documents.
  • Control over collection accounts and escrowed proceeds.
  • Collateral Management Agreement with approved operator where required.
  • Corporate guarantees or SBLC support where needed.
Use of Proceeds Restricted to eligible trade cycles including purchase of goods, freight, insurance, duties, and verified working capital linked to the underlying contract.
Key Covenants
  • Borrowing base coverage 110% to 130% at all times.
  • No new liens or pari passu debt without consent.
  • No dividends, affiliate loans, or asset disposals outside the ordinary course.
  • Maintain hedges for price and FX risk where exposure is material.
  • Minimum tangible net worth and liquidity tests as agreed.
  • Sanctions, AML, and anti-corruption compliance.
Reporting and Monitoring
  • Weekly inventory and shipment reports during drawdown.
  • Monthly management accounts and receivables aging.
  • Inspection rights, site visits, and field examinations where required.
  • Bank statements for pledged accounts.
Conditions Precedent
  • Complete KYC and AML, corporate approvals, and legal opinions.
  • Executed offtake or supply contracts with acceptable counterparties and Incoterms 2020.
  • Insurance covering cargo and stock. Political risk or credit insurance where relevant. Lender named as loss payee.
  • Assignment of proceeds, perfected security interests, and account control.
  • Independent valuation or inspection where required.
LC and SBLC Rules Documentary Letters of Credit may be subject to UCP 600. Standby Letters of Credit may be subject to ISP98. Demand guarantees may follow URDG 758. Documentary collections may be subject to URC 522 where applicable.
Governing Law and Jurisdiction
  • Facilities may be documented under English law or New York law.
  • Disputes may be submitted to English or New York courts. ICC or LCIA arbitration may be considered case by case.
  • Local security will generally be governed by the law applicable to the relevant asset or security interest.
Eligibility Post-revenue companies with verifiable trade history. Preference for EBITDA above USD 10,000,000 and audited financials. Transaction eligibility remains subject to counterparty, jurisdictional, credit, and compliance review.
Events of Default
  • Payment default or breach of financial covenants.
  • Material misrepresentation, fraud, or sanctions breach.
  • Cross-default above agreed thresholds.
  • Material adverse change affecting performance of the financed trade cycle.
Process and Timing
  • Week 1: intake, NDA, document checklist, and preliminary structuring.
  • Weeks 2 to 3: due diligence, underwriting, approvals, and definitive documentation.
  • Weeks 3 to 4: collateral setup, account controls, and first draw or instrument issuance where applicable.
First-Loss Capital Sponsor contribution or third-party junior tranche sized at 10% to 30% of facility. Funding mechanics, subordination, waterfall seniority, return profile, and intercreditor terms are established in final documentation.
Borrower Costs External legal counsel, audit, inspection, collateral management, valuation, courier, banking, and SWIFT expenses may be borne by the borrower where applicable.
Advisory Basis All structures and indicative terms are presented on a best-efforts basis and remain subject to lender, bank, insurer, investor, credit committee, legal, and compliance approvals as applicable.

Indicative Terms. Ranges may vary according to counterparty quality, transaction structure, collateral controls, jurisdiction, documentation, tenor, concentration, and prevailing market liquidity.

Disclaimer. All terms are indicative and subject to final facility documentation. Financing availability and commercial terms may vary according to borrower credit quality, transaction structure, collateral, jurisdiction, counterparty risk, and market conditions. This document does not constitute a financing commitment, investment recommendation, or legal, tax, or accounting advice.