The secondary trade space is getting increasingly attractive to institutional funders who are discovering the benefits of the asset class with much enthusiasm. In addition, the macro-economic and regulatory trends as well as pressing client needs – in particular on the SME side – are changing the dynamics of this market.
 
As reported in The Wall Street Journal of 22 January 2020 in an article entitled “Money managers, Lured by Rich Returns, Venture Into Risky World of Trade Finance“: “…large money managers buy trade-finance assets that lenders have already originated instead of funding importers and exporters directly. Often these assets are wrapped up into asset-backed securities.” In the same article, Surath Sengupta, global head of FIG, Portfolio and Distribution at HSBC, said “HSBC has increased the trade financing it sells on to investors and other lenders from $2 billion in 2015 to $28 billion last year [2019].”
 
This illustrates a key trend as originating banks are expanding their distribution network and volumes in order to grow their trade financing capacity. Rather than limiting themselves to the niche inter-bank space, banks partner with institutional investors and are therefore making trade assets more accessible to those non-bank funders through securities formats such as Notes.
 
What are the benefits of accessing trade assets through notes for institutional investors? Is this asset repackaging process introducing new risks? How does this practice fit with the established MPA? Which are the key legal considerations? How are the roles and risks shared by the various stakeholders? What does it take to repackage trade assets such as trade loans, L/Cs, payables and receivables? What else is required to make trade assets accessible to institutional funders? How are the top trade banks benefiting? What type of funders are trade banks aiming to attract? How can this community of investors be further expanded?
 
Join us on 24 November for a TFD Initiative thought leadership webinar on making trade investible for institutional investors. The session will offer you expert insights from the following speakers:

• Nick Stainthorpe, Partner, Reed Smith LLP
• Bertrand de Comminges, Global Head Trade Finance Investments, Santander Asset Management
• Surath Sengupta, Global Head – FIG, Portfolio and Distribution, HSBC and Co-Chair, ICC’s working group on Institutional Investors in Trade Finance (IITF)
• Moderator: André Casterman, Chair, Fintech Committee, ITFA

This webinar is aimed at trade finance originators, factor houses, credit insurers, institutional investors whether representing banks or non-bank financial institutions, asset managers and venture capitalists interested in the trade finance arena. Corporate treasurers are welcome to attend too.
 
The webinar will take place on 24 November 2020 at 12:00 BST, 13:00 CET, 07:00 EST, 20:00 SGT. Please register via email to alexiavella@itfa.org.
 
We hope to welcome many of you on that day and benefit from your questions and feedback. In the meantime, we invite you to consult our recent TFD Initiative article entitled “The evolution of trade distribution practices and implications for technology platforms”.