Commodity finance

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What is Commodity Finance?

Commodity Finance covers a range of financing activities related to commodities, including base and precious metals, agricultural materials and energy. 

Who are the clients involved?

Clients primarily include producers, traders, distributors and processors. They are supported throughout the entire value chain, from production to the transportation of raw materials to the places of processing or final consumption.

What is Commodity Trade Finance?

Commodity Trade Finance is a subset of Commodity Finance and focuses on financing the underlying exchange of commodities from supplier to buyer.
Structured Trade Finance is another subset of Commodity Finance. It relies on specific financing techniques designed to mitigate financing risks, particularly in situations where the transaction duration exceeds the typical asset conversion cycle.

What financing instruments are used in Commodity Finance?

Although Commodity Finance is predominantly short-term in nature, the bank can also offer longer-term financing solutions, depending on the transaction structure.

Typical instruments include:

  • notification, confirmation and discounting of documentary credits;
  • issuance of international guarantees and stand-by letters of credit (SBLC);
  • transactions supported by public export credit agencies;
  • transactions covered by supranational entities or private insurers;
  • syndicated financing;
  • open account financing solutions, where goods are shipped by the exporter and received by the importer before payment is made or becomes due;
  • commodity price and risk hedging solutions.