TFA Briefing Canada's bumper year

12 April 2017

TFA Briefing

Canada's bumper year EDC, the Canadian export credit agency, revealed last week what a bumper year it had in 2016. The agency supported more than C$100 billion ($74.5 billion) of Canadian exports and foreign investments throughout the year, as well as a record C$28 billion ($20.9 billion) in financing transactions. It also finished the year with total assets of $63 billion and a net income of $1 billion, allowing it to pay a dividend to the Government of Canada of $786 million. In March EDC also announced a new financing hub in Singapore – its first outside of Canada. Although EDC has representative offices around Asia, the hub in Singapore will be allowed to close transactions independently, meaning it can complete deals in the same time zone as Asian buyers of Canadian goods, instead of having to transfer deals back to its headquarters in Ottawa. EDC’s strong year is symptomatic of the Canadian trade finance in the recent past. Trade finance deal volumes in Canada grew substantially in 2016, according to Trade Finance Analytics – so much so that last year, the country overtook Brazil and Mexico to become the second-largest market in the Americas for export and agency transactions, behind only the US (see graph 1). Meanwhile, Canadian lending to the Americas rose last year (see graph 2), the third consecutive year of growth. Canada’s export volumes were led by sectors such as information and communication technology, infrastructure, mining, light manufacturing and transportation, says EDC’s manager of external relations, Jim Taylor. Cleantech is a major growth industry in Canada. A recent federal budget earmarked nearly C$1.4 billion in new financing to support cleantech firms. EDC’s Taylor says this will be an area of focus in 2017: “We plan to do even more in cleantech, even though we had a record year [C$100 billion], simply because we are seeing demand globally. It’s broad-based.” Despite fears that demand for cleantech may shrink south of the border due to the new US administration’s disregard for the environment, EDC expects Canadian cleantech companies to benefit from global demand. Taylor adds: “Even if cleantech

abates somewhat in the US, demand is coming from everywhere. So we see a lot more opportunity there.” Market observers are upbeat in other sectors, too. Speaking last month at Trade Finance’s Export and Agency Finance Americas Council in Miami, Alexander Borisoff, a partner at Milbank, noted that at a recent metals conference in Canada, the atmosphere was “the most optimistic it has been in years.” See Trade Finance's Full Year 2016 League Tables here.

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Mandate Mill UK Export Finance has signed what it calls a “historic” memorandum of understanding with the Iraqi government to identify critical infrastructure projects for financing. Korea Eximbank is to provide a $1 billion loan towards the ECA and commercial bank financing for the Clean Fuels Project refinery financing in Kuwait. Hungarian Export-Credit Bank is to extend a €255 million ($270 million) credit line for exports to Turkey in order to increase the volume of trade between the country’s from roughly $3 billion to around $5 billion. Afreximbank is arranging up to $1.5 billion in financing for projects under Burkina Faso’s five-year National Economic and Social Development Plan. AfDB and a consortium of Chinese banks have been mandated to finance a $3.3 billion deep water port

at El Hamdania in Algeria. Chrysaor, the independent oil and gas E&P company backed by Noble Group is looking to raise a $1.5 billion reserve-based loan from a bank syndicate to part fund its acquisition of a portfolio of assets in the North Sea from Royal Dutch Shell. Export-Import Bank of China has been mandated to lend $600 million for the construction of a deep-sea port in the Cabina enclave north of Angola, alongside the Angolan sovereign wealth fund FSDEA. Tanzania has made a funding request to the Export Credit Bank of Turkey for the construction of a new cross-border railway line starting Da es Salaam.

Top Stories Coface North America hires ex-Deutsche trade financier Coface North America has hired Stephen Atallah as a senior executive vice-president and head of risk and commercial underwriting, the trade credit insurer announced on 28 March.

ECA lender emerges on DEWA solar The soft mini-perm financing for Masdar and EDF Energie Nouvelles’ 800MW solar project in Dubai is taking shape. A number of international and regional lenders have signed commitment letters for the approximately $650 million multitranche debt package, it is understood.

Trade Finance Awards 2017

The all of the winners of the Trade Awards 2017 have now been announced. Over the course of the last couple of weeks, trophies have been handed to winning institutions at our gala dinner in London, Miami and Singapore.

Africa Trade Finance launches securitisation platform Africa Trade Finance, the alternative finance provider, has launched a securitisation vehicle for African trade finance deals, with which it aims to raise $100 million by the end of the year, director Christian Karam told Trade Finance.

Bank group shakeup as Trafigura closes revolver Trafigura has upsized the one-year portion of its revolving credit facility and extended the maturity on the three-year tranche, with eight new banks joining the facility.

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