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Is structured commodity finance a hidden bubble?

Posted on 28 March 2014

Commodity markets focus on bringing commodities from their place of origin to the centres of demand in the most efficient manner. Banks, trade houses, consumers and producers all aim to bring efficiency to this flow, but there is always room for improvement.
Structured finance, the activity of lending against inventory held as collateral, focuses on ameliorating and streamlining two aspects of the commodity business – cash flow and flow of goods. Structured finance has usually been the forte of large financial institutions, but recently commodities trading firms have entered this business. This has resulted in excess lending capacity, which has led to lower costs of capital for borrowers………………………………Full Article: Source


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VRS - who has written 40616 posts on Opalesque Commodities Briefing.


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