The world of Loans and Structured Trade Finance…

1. The world of Loans and Structured Trade Finance… CLACE Conference - May 2010

2. Structured Trade Finance • What is STF? Back to Business? • Why STF? Square Peg into Round Hole, Longer Tenor/Larger Size, Unchartered Places, Difficult Markets • How to Work with ECAs, Multilaterals • Private Insurance Market – Trade Credit/Brokers • Bankruptcy Remote, Securitizations • Forfaiting, Factoring, Supply Chain Financing • Secondary Markets • Specializations, Access to Market, Flexibility CLACE Conference - May 2010

3. What are these ‘worlds’ and how do they differ…?? CLACE Conference - May 2010

4. Deal sizes can range enormously… • Trade Finance deals tend to range from US$1m to US$ 100m • Loans tend to range from: • US$1m to US$100m for ‘bilaterals’, • from US$50 to US$250m for ‘club deals’, and • from to US$100 to US$1bn for ‘syndications’ …but can be higher!!! CLACE Conference - May 2010

5. How big are these worlds…?? CLACE Conference - May 2010

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7. More specifically… • Volume of World Merchandise Trade: • 2006 US$ 11.8 trillion • 2007 US$ 13.6 trillion • 2008 US$ 15.7 trillion • Global Loan Issuance: • 2005 US$ 3 trillion • 2006 US$ 3.5 trillion • 2007 US$ 4 trillion • 2008 US$ 2.25 trillion CLACE Conference - May 2010

8. …and in 2009 World Merchandise Trade fell 23% to US$ 12.1 trillion!! Global Loan Issuance fell 22% to US$ 1.75 trillion!! …ouch!! CLACE Conference - May 2010

9. Which felt like this for some… CLACE Conference - May 2010

10. What of 2010- Smooth sailing or stormy waters ?? CLACE Conference - May 2010

11. Well, it’s complicated… CLACE Conference - May 2010

12. …and tricky CLACE Conference - May 2010

13. …and volatile!!! CLACE Conference - May 2010

14. But there’s hope, I think… • Q1 2010 loan issuance up handsomely year-on-year; • WTO economists forecast global trade to rise 9.5% in 2010 – March • Secondary market activity bubbling • Investors hungry for assets • Margins and yields falling • Tenors lengthening CLACE Conference - May 2010

15. Or there was until things started to change in Q2 2010… April 23 – Greek govt requests the EU/IMF bailout package be activated… CLACE Conference - May 2010

16. And suddenly things change again… • Market sentiment becomes uneasy • Increase in ‘cost of funding’ (liquidity) • 3mth Libor doubled in 2 months!! CLACE Conference - May 2010

17. CLACE Conference - May 2010

18. And suddenly things change again… • Market sentiment becomes uneasy • Increase in ‘cost of funding’ (liquidity) • 3mth Libor doubled in 2 months!! • Diminishing confidence all round • Higher yields demanded by lenders/investors • Opportunistic bidding/buying in secondary market CLACE Conference - May 2010

19. Regional Overview - Asia • High levels of local currency who have strong appetite to lend to familiar names • Chinese banks lent aggressively in 2009-2010 (especially in the property sector) - eg, over US$1trn in Jan ’10!! - but this momentum has slowed following recent govt restrictions • Elsewhere, steady flow of deals from Australia, Indonesia, Philippines, Singapore and Vietnam; • Tenors being pushed …as far as 7yrs • Notable commodities deals: • Trafigura Beheer raised US$2.3bn in Mar ‘10 • Glencore Int’l raised $10.2bn in May ’10 • Vitol Asia/Holding raised $1.3bn in May ’10 • ‘Landmarks’ deals with LatAm – Chinese and Taiwanese CLACE Conference - May 2010

20. Regional Overview – Gulf region • Prominent debt restructurings in the last 2yrs – eg, Kuwaiti investment co.s, Dubai Inc and Dubai World (US$24bn), Saad and Algosaibi (US$22bn), Dolphin Energy (US$4bn) • Balance sheet deterioration – higher NPL’s related to realty • Investors very selective how they deploy their liquidity • 3yr tenors are ‘sweet spot’ • Explicit guarantees required; no more ‘name lending’ • Abu Dhabi and Qatar sovereign success in the bond market – raised US$38bn in 2009, up from US$12bn in 2008 • Few sellers offering steep discounts in the secondary market CLACE Conference - May 2010

21. Regional Overview - Europe • Substantial number of ‘jumbo’ refi’s in Germany and Spain – over US$100bn each in 2009 • ‘High grade’ tenors pushed to 5yrs • Borrowing costs drop 50% over last 12mths… CLACE Conference - May 2010

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23. Regional Overview - Europe • Substantial number of ‘jumbo’ refi’s in Germany and Spain – over US$100bn each in 2009 • ‘High grade’ tenors pushed to 5yrs • Borrowing costs drop 50% over last 12mths… • ‘Technical rebound’ in leveraged loan market in 2009 – top 40 loans soared 30pts (or 50%!!) to 90% of face value – but now see notable sellers and little appetite • Liquidity has become prominent issue again – forced banks to withdraw from primary loans • Secondary market activity ‘spotty’ CLACE Conference - May 2010

24. The market has slowed down… CLACE Conference - May 2010

25. …‘pipeline’ not too promising CLACE Conference - May 2010

26. Regional Overview – Latin America • A relative paradise to the weary!!… CLACE Conference - May 2010

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28. Regional Overview – Latin America • A relative paradise to the weary!!… • Enjoyed fabulous commodities boom; Brazil enjoying a bonanza… …aided by a prudent central bank • Chile rocked by earthquake but has funds to rebuild • Mexico sent reeling in 2008 – following US downturn – now ‘on the mend’ • Top-tier banks and corporates awash with liquidity!! • Bond markets undercut and ‘outpaced’ loans in 2009/10 • Borrowing costs tumbled over last 18mths • Tenors being pushed to 3yrs and beyond… CLACE Conference - May 2010

29. And what ofPricing…?? CLACE Conference - May 2010

30. And what ofPricing…?? “PLEASE CALL THE DESK…” CLACE Conference - May 2010

31. Thank you for your patience…Brendan Herley‘Distributor of Loans!’ CLACE Conference - May 2010