Structured Finance: Pre-Exports Stoke Loans
Jan 1, 2010
The syndicated loan market is reawakening with the help of one of its most tried and tested structures, the pre-export facility.
New deals for Brazil-based Cosan and Fibria, both closed in November, were well received by lenders, providing a useful set of benchmarks and encouraging signs of willingness to extend credit and participate in broad syndications.
Barring a handful of forced rollovers, some restructurings and isolated instances of time-sensitive M&A financings, syndications barely stirred last year. As the market reopens, Brazil, home to some of the region’s biggest exporters and commodity producers, is providing more than half of the new supply.
"The pre-export structure helps mitigate the Brazil country risk component for some international lenders," says a São Paulo-based syndications executive. Since payments backing the loans are often made by non-Brazilian counterparties, credit committees require a smaller amount...
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