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Commodity Trade Finance

Citi's Commodity Trade Finance offers clients solutions covering the whole commodities supply chain, from the producers through to the commodity traders and processors.

The advantages of Commodity Trade Finance

  • Enhanced working capital solutions that are capital efficient for banks resulting in competitive pricing
  • Structured facilities and transactional security that extend the available financing beyond traditional lending
  • Effective balance sheet management through the reduction of receivables, monetization of inventory and mitigation of counterparty risk
  • Performance risk financing that allows emerging market producers with a successful production track record to borrow against the value of future production, which has proven to be a stable source of financing even in times of financial uncertainty and market volatility

Citi offers three types of Commodity Trade Finance:

Transactional Financing

Transactional financing to finance client's end-to-end commodity flows from the purchase of the commodity to the on-sale to their buyer:

  • issuance and confirmation of letters of credit supported by bills of lading, letters of indemnity and other freight documents
  • short-term, self-liquidating structures, secured through the associated trade receivable or export letter of credit, and by the underlying commodity and related offtake contracts
  • trade advances, receivable discounting, account receivable programs and undisclosed or silent payment guarantees

Borrowing Base Financing

Borrowing base financing to finance client's working capital against security over commodity inventories and associated trade receivables:

  • self-liquidating, secured, revolving facilities
  • With or without involvement of an independent collateral manager

Performance Risk Financing

Performance risk financing for producers and processors:

  • pre-export finance transforms payment risk on the emerging market producer into performance risk by capturing cash flows generated from the export of commodities offshore so that debt service takes place outside the emerging market country
  • pre-payment finance is an alternative to pre-export finance whereby funds are provided to the emerging market producer via the offtaker on a limited recourse basis.

Citi's strengths

  • Our global network that matches the geographic reach of the commodity industry
  • Our extensive correspondent banking network and corporate coverage model
  • The advantage of a USD balance sheet
  • Our leading transactional processing capability