The LMA is pleased to announce the introduction of its new recommended form of the Single Currency Maturity Facility Agreement, which is intended for pre-export financial transactions. The PXF agreement was created in response to increased demand from pre-export financial market practitioners, who felt that an LMA-recommended form would help improve the efficiency of the PXF market by creating a common framework and common language for PXF transactions. Why do you expect the new document to be adopted by market participants? The LMA documentation is already widely recognized as a good basis for trading in corporate credit markets. The LMA`s approach to adequate standardization in the PXF financial sector should be as attractive as in the corporate markets. LMA`s documents will already be known to many law firms and market players operating in the financial markets of the PXF. In the case of a forward financing transaction, the borrower uses the facilities to pay in advance for the goods he must deliver by the manufacturer of these products as part of a sales contract. The borrower enters into a contract with the seller and an agreement in advance. The borrower exaggerates the prepayment and the seller uses the proceeds of the advance funds to make the goods. The remaining amounts under the down payment agreement are increased by interest and the delivery of the goods by the seller is charged on the amount of the outstanding advance to be liquidated. Such financing will provide the borrower with sufficient cash flow and liquidity to maximize the production of goods or services. It is often used to finance large capital-intensive production operations.
In the case of export financing, the funds are paid before delivery and/or into the borrower`s account in case of recovery of payment for an export transaction on the supplier/contractor`s account and/or on the borrower`s account. Financial pre-payments have started historically, in order to solve producer financing problems, particularly in countries where trade control rules are applicable, the PXF agreement, which uses the same basic structure and “boil platform” as the recommended form of the loan agreement for debt financing (or, if applicable, the recommended forms of the primary document for the investment degree market) was developed with contributions from an experienced working group made up of representatives of banks (including internal agents). The document starts from a traditional pre-export financing structure, in which a long-term loan facility is made available to a borrower who sells certain products under sales contracts, taking over the guarantee of these sales contracts, associated letters of credit and certain bank accounts on which payments are made or swept under the sales contracts. The document contains specific provisions for pre-export financial transactions related to these sales contracts, as well as certain coverage rates for the review of the benefit under these sales contracts. Pre-export financing is a financial instrument by which a funder transfers funds to a company on the basis of historical buyer orders. The company will generally use the funds to produce and deliver goods for the buyer. In a basic PXF transaction, the borrower enters into a sales contract with a buyer and a facility agreement with the lender. The borrower`s subsidiaries and parent company generally offer guarantees to the lender, although the borrower may be the sole security provider based on the facts of the transaction. The borrower uses the means to produce and export goods to the buyer. The buyer then sends the payment directly to the lender, and the lender deducts the fees and interest associated with the loan before sending the payment to the borrower`s account.
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