Eurivex Trade Finance Limited (“ETFL”) uses the money from the issuance of Notes to provide trade finance facilities to Cyprus and overseas based companies. Any Supplier which issues invoices on credit of up to 120 days to its customers is entitled to assign the invoices to ETFL for instant cash to boost its liquidity.
In some cases, ETFL insures the trade receivable against default risk with Euler Hermes. This means that if any of the Supplier debtors’ default, we will recover our money from Euler Hermes.
In other cases, where the Supplier has very strong financials, has a wide customer diversification and passes the ETFL Credit Committee evaluation, the trade facility will be provided without credit insurance but with right of recourse on the Supplier. This means that if any of the debtors’ default, ETFL will seek to recover the money from the Supplier.
Invoices that are credit insured are secure since in the event of default, the full amount will be recovered from the credit insurance firm. These are classified as Conservative Strategy Investments (“CSI”).
Invoices that are not credit insured are not secure, even though Eurivex has the right of recourse on the Suppliers. Therefore, if an invoice is not settled by the debtor, Eurivex may still recover your money from the supplier. These are classified as Balanced Strategy Investments (“BSI”).
Risk of default in Conservative Strategy
The Conservative strategy invests only in trade finance deals that have been insured against credit default risk with Euler Hermes.
As an example, Supplier A enters into an agreement with Eurivex to insure its Debtors BB, CC, DD, EE and so on. In the event that debtor EE defaults and is not in a position to pay its obligations to Supplier A then Eurivex will submit a claim to Euler Hermes and seek the amount that has been insured.
The process will take between 60-90 days until the claim is settled and Eurivex collects the money on behalf of the Noteholders.
In reality, when an invoice is credit insured, the risk of default shifts from the Supplier to Euler Hermes.
Euler Hermes is the world’s largest credit insurance firm.
Euler Hermes Group is a listed company in NYSE Euronext Paris since April 12, 2000.
It is rated “AA” by Standard & Poors and “Aa3” by Moody’s.
Euler Hermes has €890 bln of business transactions protected worldwide