J P Morgan has signed a new Credit Guarantee Agreement with the Asian Development Bank (ADB).

The agreement comes under ADB's Trade Finance Facilitation Programme (TFFP), which has a significant focus on making letters of credit (L/Cs) more available in emerging Asian markets.

Expanded coverage

The expanded partnership within the TFFP builds on the Risk Participation Agreement signed by the two banks last year.

Under the new agreement, J P Morgan can expand risk coverage to additional markets such Indonesia, Nepal and the Philippines.

L/C support

Under its Credit Guarantee Agreement, ADB provides guarantees to confirming banks like J P Morgan covering country risk as well as risk on issuing banks' L/Cs and other trade finance instruments.

Through the credit guarantee, ADB shares risk with confirming banks to provide assurance to exporting companies that they will definitely be paid for shipments to some of Asia's most challenging markets.

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