Can you walk us through how the trade finance process works from origination to repayment?
I’d describe the trade finance process as a three-step journey: sourcing, underwriting, and monitoring. This is core, bank-originated business, primarily involving senior secured loans that banks originate to hold on their own balance sheets. The purpose is to facilitate trade flow and critical infrastructure.
On the sourcing side, we maintain close relationships with international banks and multilateral institutions, which gives us access to a consistent and high-quality pipeline of transactions.
Once a transaction is identified, we move into underwriting. Here, we assess both the counterparty and the structure in detail, using a combined top-down and bottom-up approach. This includes country and sector analysis, alongside a deep dive into cash flows, collateral, and downside protections.
Finally, throughout the life of a transaction, we monitor performance closely, ensuring covenants are met and risks are actively managed through to repayment. We also conduct regular portfolio reviews to make sure we remain fully up to date on every name.
We monitor performance closely, ensuring covenants are met and risks are actively managed through to repayment.
What disciplines guide the team’s investment process in trade finance?
Our investment process is guided by a few key disciplines.
First and foremost is credit quality. We focus on well-established counterparties operating in essential sectors, typically industry leaders, national champions, and large blue-chip companies.
Second is rigorous structuring and downside protection. We ensure each transaction is appropriately secured and robustly structured.
Third is diversification. We build portfolios across geographies, industries, and transaction types to manage concentration risk. Importantly, we don’t finance or take concentrated exposure to any single corridor or shipping route. Instead, the portfolio is constructed with multiple layers of diversification and risk controls to help limit volatility.
This approach is particularly important in the context of recent regional conflicts, as we are not disproportionately affected by geopolitical disruption.
Together, these disciplines support consistent and resilient risk-adjusted returns.
How does this Strategy fit into an investor’s portfolio, particularly as an alternative credit solution alongside traditional credit and private credit?
Project and Trade finance can play a highly complementary role alongside traditional and private credit strategies. It offers floating-rate exposure, short duration, and low correlation to broader credit markets, which can help improve overall portfolio resilience.
In addition, the self-liquidating nature of many transactions provides regular cash flow and visibility on repayment.
Taken together, these characteristics position trade finance as a defensive, income-generating allocation within a broader credit portfolio.
For more information on our Trade Finance Strategy.
Share:
BD017665
