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Structured Finance, an area of expertise
"To combine, strengthen and capitalize on expertise" such is the objective of the organization set up by Jean-François Marchal, recently appointed Head of Calyon's Structured Finance Department. An opportunity to present the solutions that Calyon can offer in the area of structured finance, a business where its professionalism and innovation capability is matched by very few players in the market.
Structured finance: an area of expertise
In 2007, Calyon maintained and even improved its positions amongst the world's leaders in most structured finance areas, combining loans and advisory services. The bank has few peers matching this regularity and performance level. The needs of the market remain significant as they correspond to an economic reality, be it the construction of airport facilities in India, the maintenance of bridges in the USA or the renewal of a power station with an approximate life span of 30 years. This sustained demand is bolstered by both the improvement of the standard of living worldwide and changes in consumption habits.
Structured finance involves originating, structuring and financing large scale export transactions and investments, resting often on physical assets (aircraft, ships, office buildings and plants, commodities…) or complex and structured loans.
Transactions come under six categories:
- export and trade finance,
- transactional commodities finance,
- project finance and structured commodities finance,
- real estate and lodging,
- aircraft and railway finance,
- shipping.
Export Finance: Türk Otomobil Fabrikasi AS example
"The excellent commercial relations between Fiat and TOFAS and all the Crédit Agricole s.a. Group's business lines in France, Italy and Turkey as well as the interaction of our local teams in these three countries permitted to structure this large export finance transaction" says Caroline Mouly, Export Finance, the transaction's coordinator.
Last March, Calyon alongside Société Générale, Fortis, ING, Intesa SanPaolo structured a EUR 450 million loan for Türk Otomobil Fabrikasi AS (TOFAS). This loan will finance the erection, in the Bursa plant, of a new assembly line for small utility vehicles with an annual output capacity of 120,000 vehicles. The CUVs are to be sold on the European, Turkish and Middle East market under the FIAT name. Calyon acts as agent for the Sace tranche.
"The coordination of efforts from teams located in different countries is our leading asset in the performance of complex export transactions" underlines Henri d'Ambrières, Head of Export finance. "Our strength lies in the know-how and the sharing of past experience of our expert team in Paris, of the relations built by our local teams with our exporting customers and with the credit insurance agencies, on the one hand, and with our borrowing customers, on the other. In this transaction, the relations with the FIAT group and SACE in Italy and with TOFAS and the KOC group, a TOFAS shareholder alongside FIAT, in Turkey were essential".
"Our second upside is our ability to innovate in the combination of our products" he added. "Because of our adaptability we were capable to transpose our experience from one country to another. So, for the first time in Turkey, the financial structure combined a buyer credit with a loan from the EIB."
The Structured Commodity Finance team structures a unique project in Mozambique
Calyon's Structured Commodity Finance team structured a landmark transaction in November 2007: it financed the acquisition of Hidroeléctrica de Cahora Bassa (HCB) by the Government of Mozambique.
The amount, the prepayment financing and the term of the credit granted in connection with this operation make it a first of its kind for Calyon. The Bank received a Lead Arranger mandate to structure, underwrite and syndicate a USD 800 million credit for an unprecedented period of 10 years for the benefit of the Government of Mozambique, with a Portuguese Bank.
The first South African Rand (ZAR) denominated prepayment financing operation of this size in the field of energy in Mozambique, this project mobilized the efforts of the entire Structured Commodity Finance team.
HCB, which operates the Cahora Bassa dam, the second largest dam in Africa, is now 85% controlled by the State of Mozambique with the remaining 15% being owned by Portugal.
South Africa is regularly affected by power failures. HCB has recently completed a separate refurbishment of the power station which will allow HCB to step up its generation capacity and deliver more electricity to ESKOM to cover the needs of the booming South African economy.
