Inaugural 1 Year Bond Issuance 5.00% in USD 4.50% in GBP 3.50% in EUR Expected Rating : A+ (ARC Ratings) from a USD500mio Bond Issuance Programme Listed in Luxembourg and authorised by the CSSF (Luxembourg Regulator) 1
Transaction Highlights - Unique opportunity for investors to receive an above-market return from trade finance - Investment grade bond structure that is independently assessed by ARC Ratings as being higher grade than many well known corporate bonds - Experienced management team - Fixed, semi-annual returns from a bond that is listed and issued from a program authorised by the Luxembourg Regulator (CSSF) 2
Termsheet and Timeline Page 4 What is Structured Trade Finance? Page 8 Our Strategy Page 14 Transaction Structure Page 19 Our People Page 23 3
Termsheet and Timeline 4
Indicative Termsheet Issuer : Synthesis Trade Finance I SA Senior Secured Notes issued from the Synthesis Trade Finance USD500,000,000 MTN Status of the Notes : Programme The Borrower will purchase a diversified portfolio of trade finance loans that will each be Purpose of the Note Issue : backed by collateral, letters of credit or credit insurance, as detailed in the Programme Credit Rating : ARC Ratings : A+ (indicative) Issue Size : USD [50-75] mio across any or all of USD, EUR and GBP Marketing Period : [9th] November 2016 — [28]th November 2016 Issue Date : [5]th December 2016 Maturity Date : [5]th December 2017 Issue Price : 100.000% Denominations : USD2,000 / EUR2,000 / GBP2,000 Interest Rate : USD : 5.00% ; EUR 3.50% ; GBP : 4.50% Application will be made by the Issuer for the Notes to be admitted to trading on the Euro Listing and Admission to Trading : MTF Market of the Luxembourg Stock Exchange Minimum Subscription : USD2,000 / EUR1,000 / GBP2,000 ISIN : See separate termsheets Issuing and Paying Agent : Citibank N.A., London Branch Auditor : PricewaterhouseCoopers Societe Cooperative Security and Note Trustee : Capita Trust Company Ltd Legal Counsel for the Borrower : Holman Fenwick Willan Settlement Agent : Citibank N.A., London Branch Settlement : Euroclear/Clearstream Governing Law : English Business Days : [London, New York, Target] 5
Investor Timeline Expected size of the issuance Final size of the bond issue is will be announced and determined and published investors will be asked to Synthesis Trade Finance and investors will receive place firm orders for the bonds are marketed their allocations from their bonds authorised distributor 9th November – 24th November – 28th November 27th November 28th November 5th December SETTLEMENT DATE 28th November 3rd October 27th October 9th November Synthesis Management Synthesis Trade Investors provide full settlement instructions to the Limited receives MIFID Finance S.A. Bond Final Timeline for Bond Issuance by Synthesis Trade Authorised Distributor Licence from the UK‘s FCA Issuance Program receives formal Finance I SA is agreed approval from Luxembourg‘s CSSF Borrower Timeline 6
Synthesis Trade Finance SA Bond Issuance Synthesis Trade Finance SA intend to issue the first in a series of bonds during November 2016 following the approval of our bond programme by Retail-denominated the Luxembourg financial regulator, the CSSF. The notes will be : Stock Exchange listed - Listed on the Luxembourg Stock Exchange - With a minimum denomination of USD2,000 or equivalent - Available for trading on the Euro-MTF market - Assigned a credit rating that is expected to be A+ - Allocated an ISIN code and deliverable in Euroclear, Clearstream and Investment Grade CREST The proceeds of the notes will be used to finance short-dated, secured, trade finance loans to a diverse pool of borrowers. Every loan will have Secured either a Letter of Credit or Credit Insurance backing it, as well as appropriate legal charges over the financed goods. The underlying loans will have no market risk because we are simply financing existing back-to- back contracts. The goods themselves will primarily be commodities. The loans will be originated by Synthesis Structured Commodity Trade Finance Limited and purchased by Synthesis Trade Finance I SA. This document gives an overview of our planned issuance programme. 7
What is Structured Trade Finance? 8
Structured Trade Finance keeps the global economy running. It touches all of us each day. Traditionally it has been a business controlled by banks, but in recent years more and more opportunities have arisen for non-bank participants to lend in the sector. By focussing on the transactions with the strongest security, it has become possible to create strong returns with minimal risk. 9
Structured trade finance is where a loan is made to a company and that loan is secured on the trade assets of the borrower. Self-Liquidating Those assets could be goods in transit, receivables, inventory Strong Returns or any combination or variation of these. The advantage for borrowers is that the lender is looking beyond the balance sheet of the company at specific assets. The advantages for investors are that trade finance portfolios : Enhanced Security Are self-liquidating Have strong returns Trade finance loans are typically 30- Typically trade finance loans have 60 days so there is a clear exit path very strong returns due to the short for the lender. It also allows lenders tenor. By efficiently keeping money to quickly reduce exposure to deployed, this can be converted to borrowers, sectors and geographies strong annualised returns Low Default Rates Have strong security Have low default rates The lender generally has a charge Historically, structured trade finance over the assets being financed as loans have very low default rates well as access to a Letter of Credit or and very strong recovery rates, Credit Insurance thanks to the strong asset security 10
Structured Trade Finance in numbers $6 trillion >50% 80% 0.02% WTO Member SME share of that Of the SME share Is the historical Exports per year trade requires trade default rate finance Despite global economic SMEs continue to However, as deliveries According to the uncertainty, international globalise, moving their take longer, SMEs turn to International Chamber of trade continues to grow goods in greater size, trade finance to bridge the Commerce Report in 2011, across greater distances cashflow gap between default rates in trade production and payment finance stood at around 0.02%, better than investment grade bonds* * http://iccreport2015 Product Total Exposure ($mio) Total Defaulted Exposure ($mio) Exposure-weighted Default Rate Transaction Default Rate Export L/C 988,434 235 0.02% 0.01% Import L/C 1,656,528 1,210 0.07% 0.08% Performance Guarantees 1,023,561 1,154 0.11% 0.17% Loans for Import/Export 3,154,407 5,323 0.17% 0.22% 11
Why is there an opportunity for investors in Structured Trade Finance? With the phased implementation of Basel III and tighter lending criteria from banks, many SMEs have lost access to the funding that they previously had. Banks are less likely to provide trade finance credit lines now than in the past. There are several reasons for this. First, the operational costs of financing small transactions can be quite high as it can require large teams of people for a very small margin per transaction. Secondly, many transactions are cross-border and where a bank does not operate in both jurisdictions they may decline to take on such business. Finally, many trade finance transactions are for large amounts compared with the equity value of the company. The Global Financial Crisis created a gap With banks less willing to lend to SMEs, despite the strong asset qualities in trade finance, an opportunity has been created for smaller, more nimble financial organisations to enter the market. With the right experience and understanding of global trade flows, a new breed of trade finance houses is emerging who can lend based upon assets, increasing security whilst maintaining strong returns. 12
Anatomy of a trade Pre-production Inland Inventory Export port Import port Receivable Finance Finance Inventory Inventory Discounting Finance Finance Processing Marine Finance Transport Finance Transit Finance Transit Finance Transit Finance Transit Finance Cash in Advance Letter of Credit Cash against Document Open Account Supplier Most Least Secure Secure Buyer Open Account Cash against Document Letter of Credit Cash in Advance 13
Our Strategy 14
How do we choose our clients? Here at Synthesis, a large part of our success within the group comes from working exclusively with borrowers who have a strong track record in their industry. We look for a minimum of three years of successful trading by the management team and a strong business model with good margins across their product range. Strong management A. Synthesis chooses who to lend to based on these criteria C. B. Strong business Strong model client base MARKET KNOWLEDGE 15
Recommend
More recommend
