A new structured finance product aimed at high turnover, investment grade multinational exporters offers cash before shipping for import/export payments, thereby obviating the need to buy payment protection via letters of credit (L/Cs), forfaiting or export credit agency (ECA) solutions.

The Export Trade Finance Programme (ETFP) is based on a business-to-business (B2B) network developed by the US-based Global Countertrade Management Systems (GCMS) that it claims will enable corporations to generate cash value from their ongoing procurement and sales activities.

The programme aims to enable multinational exporters to finance up to 100% of export transactions - or fund the 15% foreign buyer cash requirement in ECA-supported transactions - without incurring foreign buyer risk, including political, currency, and sovereign risk.

Exporters and buyers in the programme would also be incorporated into a procurement network of around 300 entities developed over the last ten years as part of GCMS's work with MMC Enterprise Risk affiliate, Marsh Inc., developing structured finance programmes, counter-trade processes and B2B technologies.

The exporter would also select from the procurement network, goods or services that it requires in its normal course of business. The selection would typically involve a maximum three-year purchasing tenor, hence enabling GCMS to structure a non-recourse financing asset based on future cash flows from the selection.

MMC Enterprise Risk assists GCMS by placing guarantees of the cash flows generated from the programme with AA-rated insurance underwriters. The cash flows are then sold by GCMS on a discounted, non-recourse basis to participating financial institutions. The proceeds from this sale fund the programme.

This article represents the views of the author and not necessarily those of ICC or the other partners in DC-PRO.