Scipion commodity trade Finance fund

FundwatchBernard Goyder introduces the first of TFR's analyses on the evolving trade finance fund landscape

Equity market uncertainty will encourage investors to look at the trade finance funds in a new light over 2014. Hedge funds that operate in trade finance are gearing up for a busier year, as banks settle into the new regulatory framework adopted by the EU.

Types of fund

  • Two main fund types operate in trade finance: those that provide non-bank credit to customers and those that buy asset backed securities from banks:
  • Non-bank credit. These have a close relationship with customers and commodity transport.

Scipion Capital

One example of a direct fund operating is Nicolas Clavel's Scipion Capital. The London-based Africa specialists beat the Eurekahedge index of long-only funds by 48% over seven years (see Figure 1).

Nic Clavel, the founder of Scipion, says his fund acts as a lender, establishing credit for companies in Europe and Africa that are finding it hard to access capital from traditional sources. The fund produced a return of 8.5% net in 2013.

Exporters in emerging markets are struggling from risk aversion by banks, due to tough compliance regulations. Funds such as Scipion give investors the opportunity to invest in emerging market commodity chains and cash in on the lucrative trade flows between China and Africa.

BlueCrest Mercantile

Another strategy by hedge funds is to invest in trade finance securities. Funds such as BlueCrest Mercantile buy trade finance risk from banks. The market is largely conducted behind closed doors, between trade finance lenders and counterparties. Public offerings of trade finance notes give the wider financial world an insight into how risk moved off bank balance sheets. (See also James Parsons' article 'Risk, liquidity, capital - and trade finance securitisation' .)

High-profile deals

The highest profile securitisation in trade finance last year was Citi and Santander's US$1bn Trade MAPS deal, which won a TFR Deals of the Year award Demand for the trade notes was high. The higher risk tranches of Trade Maps were 12 times oversubscribed. Surprise entrants such as the Tennessee state pension fund bought in, demonstrating that trade finance backed paper is starting to become better known outside the industry. TFR understands that the Trade Maps vehicle is progressing smoothly towards a new issuance in the spring.

You truly are an idiot, the Fed is a parasite

by listen_to_bleh

And is the real entity behind everything that is going wrong in our economy, and you support them. what an idiot!
Here is why we need to end the fed:
Not since 1833 have there been calls to abolish a United States bank. At the time, it was President Andrew Jackson who succeeded in abolishing The Second Bank of the United States. Today it is Congressman Ron Paul of Texas who is calling for an end to the Federal Reserve.
Paul thinks the Fed is the root cause of the financial crisis and what permitted exorbitant risk-taking by companies ranging from Bank of America (NYSE: BAC) to Citigroup (NYSE: C) and from Morgan Stanley (NYSE: MS) to AIG (NYSE: AIG)

French banks' dominance in trade finance weakens  — Gulf Times
Kris Van Broekhoven, global head of commodity trade finance at Citi, said large trading houses were effectively doing part of the job previously done by banks. “Some of the large trading houses are bridging the time between when financing is required ..

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