In order to reduce the risk of default, ETFL has entered into an agreement with Allianz Trade (formerly Euler Hermes) and Atradius, two global credit insurance multinationals and has secured credit insurance on the outstanding amount that it extends to legal entities to whom it provides financing in exchange for receiving the assignment of the invoices. The credit insurance secured from Allianz Trade and Atradius can be both specific for individual clients as well as general for undeclared amounts up to €20,000. This means that if the debtor of the legal entities to whom funding has been provided were to default or would be unable to pay their obligations, then ETFL would submit a claim to Allianz Trade and Atradius and secure up to 90% compensation for the invoice amount.
Term of the Notes
ETFL is issuing Bonds or Performance Linked Notes (Notes) to raise funds to offer trade finance to Cypriot companies. The bonds will be redeemable at the end of 12 months from the date of investment, but not more than the ultimate maturity of the Notes, which is 31 March 2032. The minimum subscription in the Notes is €1,000 and the maximum €25,000 for Retail investors and unlimited for qualified/professional investors.
Are the Notes guaranteed?
The Notes are not guaranteed, but are relatively very low risk, since as explained above, in the event that a debtor defaults, then ETFL would submit a claim for 90% compensation and secure the money from the credit insurers. This means that in all the deals where the underlying debt has been credit insured, the risk has shifted from the debtor to the global multinationals. If Allianz Trade and Atradius are unable to meet their obligations, then in such an unlikely event, ETFL would not be in a position to meet its obligations and the Notes would default.
The process and risk of investment
A supplier becomes a customer of ETFL following careful evaluation and requests specific limits for its clients to whom it intends to sell goods/services on credit. ETFL secures limits from the credit insurers on the buyers (debtors). When a supplier issues a credit invoice to its approved buyers, it then assigns the invoice to ETFL against which ETFL provides 85% immediate funding to the supplier. On maturity, the debtor needs to pay the full invoice amount to ETFL. If the debtor fails to settle the invoice, ETFL submits a claim with the credit insurers and secures 90% of the invoice value. Since ETFL gives only 85% funding to the supplier, its risk is fully covered.
Warning: As with all investments, your capital is at Risk. Please read the Key Investor Information Document (KIID) as well as Terms and Conditions of issue.
ETFL KID PLN 2023