As traditional lenders retreat from emerging markets or trade finance, the door is left open for alternative investors to fill the void, resulting in an "buyers market". High single digit and low double digit yields are easily achieved.
Performance is tied to individual collateralized loans and trade/commodity finance arbitrage opportunities, and thus should have little to no correlation to traditional equity and fixed income markets.
Trade and commodity finance is by nature a short duration (180 day average tenor) asset class. This minimizes mark to mark volatility and as deals mature, resets are fixed at the higher rate.
Dynamic risk mitigating structures, including overcollateralization, help ensure low volatility relative to target return levels
The duration of the portfolios we manage tends to be less than 1 year and in many cases less than 180 days which is a natural hedge in a rising interest rate environment.
Custom portfolios can be tailored to match the liability profiles and risk/return objectives of individual clients
Financing for the exporter to fulfill its sale to a buyer, usually secured with inventory and an assignment of the sales contract and payment proceeds
Financing against inventories held in third party warehouses where the goods are pledged as collateral to secure the loan and the purchase order and payment are assigned as the mechanism to repay the loan
Financing to bridge the purchase and sale of goods that are in transit (or in a warehouse). This approach is an outright purchase at sight and sale on a deferred payment basis using the end buyer's payment as the repayment mechanism
Financing receivables can be structured either as a loan secured by the receivable(s), or as an outright purchase at a discount of the receivable(s) whereby the the obligor is notified of the assignment and payment is made directly to Octagon