The International Chamber of Commerce (ICC) Banking Commission has released its 2018 Trade Register report.

It once again highlights the low risk nature of letters of credit (L/Cs) and other trade finance instruments compared with other asset classes.

10-years of data

The report captures a full decade of trade finance-related data containing over US$12 trillion of exposures from 24 million transactions across six products and 25 banks worldwide.

Results indicate that default rates from 2008-2018 are low across all products and regions, averaging 0.37 per cent for import L/Cs, 0.05 per cent for export L/Cs, 0.76 per cent for loans for import/export, and 0.47 per cent for performance guarantees.

Declining risk

The results extend the decline in risk seen in 2016 into 2017, likely driven by strong economic growth and the general de-risking approach taken by banks with regards to their balance sheets.

For the first time, payables finance and non-OECD Export Credit Agency-backed export finance products are included in the Trade Register.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.