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Leveraging third-party collateral is a means of credit enhancement in raising a guarantee as a contractual formality. This may be useful in support of self-liquidating transactions wherein events of default or non-performance are highly remote or otherwise mitigated and insured. This could be an option for an SME Trader looking to preserve its own credit and working capital.
This accommodation is made available through high-net-worth collateral owners employing their own cash-equivalent securities as the means to be liened by their bank behind the issuance of a guarantee such as an LC or SBLC on behalf of a client. The facility charge is determined by the collateral holder and equates to a percentage amount of the face value of the instrument required. A portion of this will cover an insurance wrap, bank charges, agency and legal fees, with the balance constituting a yield enhancement to the title holder.
Structured Facility Solutions
Stantonreed specializes in facility finance for trade related transactions.
Our firm is an experienced origination agency providing back-office support to financial principals in underwriting trade finance facilities.
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