TFG Weekly Trade Briefing, 27th April 2020
Your Monday morning coffee briefing from TFG. The severe contraction of economic activity due to COVID-19 are being felt around the world. Associations are calling for state backed support for the private credit insurance market as the impact of bank lending severely impacts critical supply chains.
Latest on COVID-19
Global cases of COVID-19 rose over 2,979,000 and total deaths rose to over 206,000. The world faces a major contraction in economic activity with the 2008–09 financial crash illustrating the risks. The failure to return to pre-recession rates of growth in Europe and the US during the recovery has caused a greater loss of GDP than was inflicted in the financial crisis itself. The IMF’s analysis from 1974 to 2012 shows that all types of recession lead to permanent output losses.
Oil reaches a historic low as it plunges into negative territory
A toxic combination of macroeconomic dispute, a global pandemic which by now we are all too familiar with and dwindling storage capacity led to negative prices for crude oil for the first time in history, and the worst performance of West Texas Intermediate (WTI) on the New York Mercantile Exchange since its futures trading opening in 1983. Read more →
UK Government makes concessions to British exporters, in response to mounting industry pressure
Following warnings to UK government Ministers around exporters being locked out of the Coronavirus Business Interruption Loan Scheme (CBILs) by banks, the UK government has clarified its position. The term “UK-based in its business activity” in British Business Bank guidance had reportedly been used as a reason to turn down loan applications to businesses under the scheme. Updated guidance now indicates that UK exporters should be eligible for debt facilities under CBILs. Read more →
Singapore scandal rocks commodity traders and their lenders
Under pressure to pay down billions of dollars in loans as crude prices crashed and demand slumped because of the coronavirus pandemic, Singapore energy tycoon Lim Oon Kuin revealed the company, which reported net income of almost $80m in its official accounts for 2019, had not been making profits for years. Hin Leong had suffered $800m in futures trading losses it had not disclosed in its accounts and that oil pledged as collateral for loans had been sold to raise cash. Read more →
Government support using trade credit insurance in response to the COVID-19 pandemic
ICISA calls for a coordinated approach across the European Union to meet the demands of the crisis triggered by the Covid-19 pandemic. This should seek to support the continuation of cover within the private market, which in turn can continue to provide essential cover to businesses currently experiencing unprecedented disruption. This coordination would enable economic sectors to still continue trading on a level playing field. Read more →
ICC Digitisation Group publishes digital rapid response measures taken by banks under COVID-19
The document collates common practices undertaken by global banks in the COVID-19 emergency situation and shares some guidance. This is not a “best practices” document and many of the practices described are being improved already. Rather it is a practical reference document with information about measures put in place to continue the flow of trade and trade finance when paper transfer has become difficult or impossible. Read more →
Letters of Credit aren’t working for buying PPE
Miscommunications, under-communicated manufacturing & shipping delays, failed negotiations, poor quality management systems, and time-consuming transactions are just a few pain points that importers face when sourcing PPE from overseas manufacturers. The upstream supply chain is also severely impacted by COVID-19. Read more →
International Trade Professionals Programme 2020
In partnership with LIBF, the ITPP allows international trade professionals to write for TFG’s publications. The top 10 writers of this years’ cohort will be enrolled onto a trade finance course, certified by LIBF. During these unprecedented times, this programme is also open to furloughed professionals or those currently unemployed within the trade finance sector. Read more →
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