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Mar 29, 2021

Trade Finance: Fixed Income Alternative

Trade Finance: Fixed Income Alternative


Trade Finance: Uncorrelated Returns · Income Generating · Asset-Backed · Short Duration


Trade finance provides essential working capital for businesses involved in manufacturing, distribution, and other domestic and international commerce-related activities. It encompasses various methods, such as factoring, reverse factoring, and asset-based lending.


Businesses often turn to trade finance when traditional banking avenues cap their lines or consider them too small. Trade finance utilizes its short duration, collateralization, and credit enhancements to mitigate risks associated with longer-term financial commitments, which is especially beneficial in a rising interest rate environment.


Trade finance stands out with its attractive yields and substantial credit protection. The investment's short tenure leads to frequent cash flows and minimal correlation with broader financial markets. Coupled with rigorous due diligence measures, trade finance offers a secure and lucrative option for investors navigating today’s challenging financial terrain.


Access the entire article to understand how trade finance can serve as a dynamic alternative to traditional fixed-income and equity investments. Explore the advantages of various financing methods within trade finance.



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Table of Contents

  • What is Trade finance? Effective Working Capital Financing Solutions

  • Why the opportunity exists

  • Is it the Right Time to Invest?

  • Why should an Investor allocate to Trade finance?

  • How it works

  • How does trade finance generate best-in-class risk vs return?

  • Risks involved in investing in trade finance




Thanks to our Contributor


Highmore


Highmore is a global alternative asset management firm, investing in both public and private markets, directly and indirectly, across asset classes and investment structures.

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