Aimed at encouraging and promoting worldwide trade, Global Trade Finance offers a wide range of financing services to make and ensure international business relations easy and successful. We offer our long experience and performance in providing commercial financing products for both exporters and importers with global vision. Here, you shall find the advantages of our credit lines, designed to make your commercial projects successful. Moreover, we are involved in the search of new finance solutions as the international trade scenario evolves. The whole range of products offered by GTF makes us your ideal travelling partner when it comes down to optimising your financial, fiscal and administrative resources, letting you benefit from the franchise and international presence of Grupo BBVA. Confirmation of L/C's The letter of credit (Documentary Credit) is an instrument which formalises a transaction, where a bank (the issuer), requested by a client (the ordering party), acts as an intermediary between the parties, committing to the seller (the beneficiary), directly or through another bank (the adviser), to pay the guaranteed amount either at sight or in instalments, as long as the beneficiary provides the required documentation of the transaction relating to the conditions of credit in the period and terms specified. In this case, the confirming bank, normally in the locality of the seller, adds its own commitment to that of the issuing bank, in order to pay, accept or discount the letter of credit. Advantages: The advantage of a letter of credit is that they highly assure both parties that the conditions established in it will be met. The payment is made based on the documents that represent the goods and, therefore, enable the transfer of the rights on such goods. The bank will never be held responsible for the goods, object of the transaction; its responsibility is limited to the supporting documents, hence the name of documentary letters of credit. Advantages for the exporter: Our Exporter Client has a bank committed to the payment, instead of taking the commercial risk of the importer If BBVA provides its confirmation, our Exporter Client disregards the sovereign risk of the country of the importer, as well as the commercial risk of the issuer bank. It is particularly effective when there is not enough credit record between the importer and our Exporter Client, or our Exporter Client does not want to assume the risk of the importer's country BBVA owns a broad network of branches, offices and correspondent banks overseas, which is why it offers a good range of banks willing to provide their confirmation It is used to guarantee the compliance of any of the parties in a commercial agreement
Back Payment Guarantee How can the buyer be sure of the agreement's compliance? BBVA offers buyers a wide variety of guarantees. Thanks to these instruments, the buyer obtains the security that the seller is capable of honouring the commitments offered or agreed in the contract. Some examples of guarantees are as follows: Mainly used in public offers. It should be provided with the offer, and ensures the payment of the guaranteed amount in the following cases: In the event the offer is withdrawn before the deadline If after winning the contest, the bidder does not accept the contract If the bid bond, once the contest is won, is not substituted by a performance bond
With this guarantee, BBVA commits, requested by the seller, to pay to the beneficiary the guaranteed amount, in the event the supplier does not fully or partially comply with the liabilities of the contract. The amount is usually 10% of the amount of the contract and remains in force until the contract is fully complied. In many cases, depending on the nature of the supply, the guarantee remains in force until the correct functioning of the machinery or equipment supplied is confirmed. It can be valid for two or more years. It is common for contracts to stipulate that the sellers will receive an advanced payment, generally destinated to the provision of raw materials which enable the manufacturing process to begin. To ensure such funds are used correctly -as specified in the contract- it is usual the buyer requests the seller a guarantee of advanced payment through BBVA. Back Import Finance In the wide range of products offered by GTF, there are also more direct solutions for purchase of goods and capital, usually for short term transactions. Such financing solutions are intended for importing company, which has to prove the merchandise purchase through shipping documents and receipts of the goods. Generally speaking, import financing uses internationally accepted instruments such as promissory note, bills of exchange, or letters of credit. Taking advantage of the Group's wide network of branches overseas and the franchise in Latin America, GTF provides Import Financing to several buyers in different countries, not only in Latin America but also in Europe and Asia. Back Pre-Export Finance BBVA provides exporters with the possibility of financing their sales both before (which allows to cover the production costs of the exported goods) and after the goods are shipped. The repayment of the financing takes place through exports collection. Advantages: Provides the exporter with enough cash-flow to buy, prepare and/or produce the goods to be exported Improves the exporter's capability to finance its buyers. This may turn into an important marketing tool for the sale of exporter's products BBVA provides the conditions of currency, term etc., that the company requires (as long as the terms are related to the nature of the goods exported)
Back Commodity Trade Finance BBVA has the expertise that combines 1) in-depth market knowledge, 2) structuring skills and 3) monitoring capabilities to offer customised financing solutions all around the world with a significant degree of credit risk mitigation for the lender. Structures that may be used are: Borrowing Base, Pre-export Finance and Prepayment Facilities. Back Forfaiting Forfaiting enables "non-recourse" advanced payments on internationally accepted notes for long and mid term export commercial transactions. This allows exporters to sell their products and provide their clients with finance, being able to receive the advance from the notes right after the goods are shipped. The "non-recourse" clause means the commercial, political and transfer risk is assumed by BBVA, with no responsibility for the exporter. Advantages: Security of Collection: elimination of political and commercial risk Immediate and full cash flow Financed without using up bank limits Improves the balance sheet (Realizable > Available) Eliminates exchange rate and interest risk Avoids the need for insolvency provisions
Advantages for the exporter: Back Mixed Finance - FAD Credits FAD Credits, also known as soft loans or tied aid, are loans made directly by the Spanish government, at very low interest rates and with long grace and repayment periods. To access this type of credit, a contract must comply with the following requirements: The importing country must be regarded "eligible", according to the Helsinki agreements. These agreements establish a maximum level of per capita income, updated each year, above which this finance cannot be granted The project in the contract must be considered not economically viable It should not be addressed to nuclear facilities or defence material
FAD credits, once approved by the Ministries of Economy of the two countries involved, are made using a Technical Banking Agreement signed by the Instituto de Crédito Oficial, as the Financial Agent of the Spanish State, and the Financial Agent appointed for this purpose by the benefiting country. The amount financed by FAD Credits is generally up to 50% of the contract, and in exceptional cases up to 100%. It is more common for the finance to be complemented by an additional loan to the buyer in OECD conditions, for the remaining 50%. The finance conditions of FAD Credits must be such, that based on the conditions of both Credits, there is an "Element of Liberality" of over 35% or 50% depending on the country. The term "liberality" is synonymous for subsidy, and reflects the free element of a credit facility which has much more favourable financing conditions for the debtor than those awarded by the market. Hence this element is a percentage which represents the difference between the updated value of the capital and future interest for paying the loans (for mixed financing) and the value of the same concepts if the Contract was financed just using a Buyer Loan in OECD conditions. BBVA has a wide-ranging experience in implementing this sort of mixed financing, acting as the provider of the Buyer Loan and as the payment bank of the FAD Credit, and according the functioning of both. Back Multisource Finance A business project may be one of those that, because of their scale and complexity, needs to be carried out by consortia composed of companies from different countries. In the event, it is appropriate the received finance is homogenous, with no discrimination in the implementation of the contracts of these companies. The only way of avoiding these discriminations is organising a common finance, coordinating a group of banks from the countries involved, or financing the project fully using the Support Systems for Exports and the coverage of the ECA (export credit agency) of each country. Because of its presence in international markets and its experience in this area, BBVA is in an exceptionally good position to provide this sort of finance. Back ECA's One of the most important elements supporting the export of capital goods in OECD countries has been the development of the insurance market. Recently, agencies for developing exports have been cooperating to facilitate access to insurance which was previously not available. Today, with some exceptions, most emerging countries are insured by various Export Credit Agencies. GTF has very extensive practical knowledge of the functioning of the insurance of Commeracial Risk and Political Risk at the most important Agencies in the market. Each branch in the overseas network is specialised in the local ECA and in others in its area. Back Buyer's Credit This is long term finance supplied to the foreign importer of capital goods and similar such as projects and services, using the guarantee of a public entity or local bank. This finance is granted on preference conditions and falls within the OECD Consensus which finance governs these loans. Export Credit Agencies protect the lender against political and commercial risks depending on the debtor/guarantor. Generally, the loan is granted for up to 85% of the contract's value, and can include partly: goods from third countries, local expenses, commercial commissions, and the insurance premiums of the ECA which is guaranteeing the loan. Advantages: For the Importer: The importer obtains medium or long term financing (up to 10 years). The importer can negotiate at an advantage, and the financing is given at preference rates, subsidised by governments of OECD countries. A fixed interest rate is obtained for the life of the loan, regardless of the fluctuations in the price of money in international markets. In turnkey projects, financing begins to be repaid only when the facility is operational. The financing institutions carry out all the administrative procedures for the financing. For the Exporter: The exports are paid in cash. Medium or long term financing is provided to their client. The export finance carried out without the exporter having to use the risk limits given by his bank. The financing risks correspond to the financing bank, no to the exporter. Competing companies which offer buyer loans will not be able to provide better conditions (maturity and interest rate), as the conditions of these loans will likewise be based on the OECD Consensus. The financing institutions carry out all the administrative procedures for the financing. In the finance of capital goods under the OECD Consensus, there is a part that is financed in the long term by a Credit Agency to the Exporter (Buyer's Credit). The remainder, usually 15% of the value of the contract, should be paid to the exporter in advance before the shipment of the goods and services. GTF offers the best structures for financing these amounts, not governed by the OECD Consensus, and also enables the financing of overdrafts not covered by the Buyer's Credit, part of the goods originating from third countries and local expenses. In addition, there is a possibility of financing, directly and/or in coordination with subsidiary banks, in local currency. Back | 
