APICORP’s Project and Trade Finance (P&TF) division provides trade finance solutions for import and export transactions in the hydrocarbon industry. The financing solutions are offered mainly for the export and import of crude oil, gas, refined products and petrochemicals produced in the Arab world. APICORP also provides these facilities to imports of industry equipment, machinery and services.
Though mainly targeted at the Arab region, the Bank also offers these facilities to importers outside the region when an Arab company has a stake in the transaction. In the past, APICORP has provided trade finance to importers in India, South Korea, Brazil, Mexico, Pakistan and Bangladesh.
Trade finance facilities are usually provided for up to a year. The facilities can be extended for up to three years depending on the client’s requirements and the risk profile of the transaction.
Trade finance is arranged on a commercial basis, on open account, against letters of credit or secured by export receivables. Where necessary, they can be structured on a revolving basis. APICORP extensively uses Islamic trade finance structures, mainly the ‘Murabaha’ structure.
The P&TF division is planning to start a documentary credit desk to provide trade settlement services like the issuance and confirmation of letters of credit.