Trade finance professionals explore funding options at GTR Mena conference

Despite cutbacks in overall expenditure, most GCC economies have retained major spending on infrastructure as announced in their budget”, said S. Anantha Subramanian while participating in a panel discussion titled “What are borrowers looking for and where are the new forms of financing coming from?", which was held as part of GTR Mena Trade Finance Week 2017, the annual gathering of trade finance professionals which concluded recently at Jumeirah Emirates Towers, Dubai.

 The event, which ran from February 12 to 16 in Dubai, played a vital role in fostering face-to-face dialogue between all sectors involved in Middle Eastern trade.

 The session approached the topic from various angles. The panelists Ranil De Silva, Head of Treasury NPS Energy; Heikki Keranen, Structured Finance, Nokia and Samer Younes, Lead Corporate Trade Sales, ADCB highlighted the key strategic objectives for financing infrastructure and the importance of bringing both the public and private sectors together. Sarah Pirzada, Executive Director, Head of Export Credit Agencies, NBAD moderated the discussion.

Representing the Indian multinational conglomerate Larsen and Toubro (L&T), Mr. S. Anantha Subramanian, Head of Finance & Accounts, International Operations, L&T said that L&T has a $8 billion backlog in the Middle East.

 Briefing the scenario, he noted that payment delays to the contractors due to liquidity crunch has affected the progress of many projects and the corporates and the major players are increasingly concerned and cautious about their reputational risk. This is not only impacting the cash flow but also the revenue, profitability and the ROI of corporates. 

He briefed on the various funding options available to borrowers and pointed out that the regional/local banks will remain an important financier but not well-placed for long term. 

“Increasing demand is being placed on Export Credit Agency (ECA) which is quite innovative and more flexible at a reduced cost. The supply chain financing, receivable financing, in particular non-recourse financing, and LC discounting are also gaining momentum to fund the working capital requirements”, he further added.

 The total volume of bonds and sukuk across GCC are likely to remain strong. With these challenges, the government funds  viz-Public Pension Agency,Investment Fund and Social Insurance can step in to support.

 “The other innovative delivery model includes encouraging private players’ participation through PPP models which can make a change in the present scenario,” he concluded