Commodity finance refers to the funding of physical commodities (energy, metals, agriculture). Main instruments for commodity financing include documentary credits, revolving credit, pre-export finance, open account finance, warehouse financing, and guarantees. Risks suchs as price volatility, counterparty risk, and logistical issues are managed by hedging (with futures/options), structured finance, and collateral agreements. Effective cash flows, accurate risk modeling, and proper due diligence are vital. Producers, processors, traders, and distributors utilize these techniques to unlock working capital, manage inventory, and facilitate international trade. Lenders rely on collateral, commodity market trends, and transparent repayment plans. Understand your transaction cycle, risk exposures, and available instruments before seeking finance.
IGAP specializes in raising funding from all available sources to provide commodity and simple to complex financing solutions, including debt and equity offerings. We work to find the right financial structure that meets your unique business needs and helps you unlock working capital and manage risk effectively.
For further assistance or to discuss your financing needs, please email us at tradex@igaptrading.com.