Eurivex Trade Finance Limited (“ETFL”) uses the money from the issuance of Bonds 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, ETFL will recover its money from Euler Hermes.
Risk of default in Credit Insured Bonds
The “Eurivex Trade Finance Credit Insured bonds” also referred to as “ETFC” are 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 ETFL 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 the money is collected.
In reality, when an invoice is credit insured, the risk of default shifts from the Supplier to Euler Hermes, which is the world’s largest credit insurance firm. Euler Hermes Group is a listed company in 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.
The “Eurivex Trade Finance Recourse bonds” also referred to as “ETFR” are trade finance deals where ETFL has full recourse rights on the Supplier. ETFL offers this service to Suppliers with strong financials that have a wide customer diversification and pass the ETFL Credit Committee evaluation. The evaluation process also involves such Suppliers providing their audited financial statements, their management accounts, debtors ageing and full disclosure of their debtors. In such cases, it is up to ETFL to credit insure some of the debtors or because of the evaluation, decide to offer its service to suppliers 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.