Trade finance case study: Servicing debt from the top of the cash waterfall

The structure of the US$275m senior-secured term loan is illustrative of how the Federated Hermes Trade Finance Strategy can generate competitive yield, while at the same time mitigating risks, and using top-line cash revenue to repay investors.

- Africa’s largest petrochemical plant in Egypt produces polyethylene pellets used to make plastic bags, pipes and bottles.

- The pellets are sold to international off-takers – intermediaries that have long-term export contracts – which ensure payment is made into a US dollar-denominated offshore account.

- The offshore structure means that the debt is serviced from the customer receipts. It seeks to ensure that Federated Hermes is repaid before any money is set aside to cover the plant’s operational expenses.

For professional investors only. Capital at risk.