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- Trade Finance Facility
Trade Finance Facility
The OPEC Fund’s TFF was established in 2006 to broaden the means available to the OPEC Fund to alleviate poverty and promote economic development. The TFF is seen as a distinct, additional window for supporting eligible developing countries in their efforts to achieve growth and prosperity. The Facility seeks out transactions that are developmentally, environmentally and socially sound, applying credit principles in line with standard practices and setting reasonable market-based return targets.
The TFF aims to facilitate the import and export activities of partner governments and enterprises. It does this by using various funded and unfunded financing instruments to address their stock- and working-capital requirements.
TFF financing is available to governments, private entities, commercial banks, regional development finance institutions and any other institution active in an OPEC Fund beneficiary country.
TFF financing has been used to support the import/export of a diverse range of goods/sectors, including oil, cotton, steel, strategic food products, garments and equipment.
TFF funding is delivered on a conventional or Islamic basis and is channeled directly or through participation in syndicated facilities, club deals and co-financing arrangements by commercial banks, other development finance institutions and trade finance funds. The OPEC Fund actively seeks out strategic partnerships with selected institutions that have proven expertise in trade financing.
Current funded and unfunded trade finance products include loans, revolving lines of credit, structured commodity finance, risk sharing and guarantees.
Tenors vary depending on the nature of the transaction, but would mostly be less than one year. Pricing is market-based and takes into account the nature of the transaction, the counterparty and the country situation. Given the OPEC Fund’s global mandate and the need to be responsive to partners, the TFF conducts unfunded transactions in all major convertible currencies. Funded transactions are traditionally concluded in US dollars or euros.