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Market View: Asian exporters and the LC conundrum

04 December 2008

Asian exporters have found access to letters of credit considerably harder of late. Trade Finance asks a panel of financiers in the region to assess how severe this problem really is.

Read more: letters of credit Asian exporters

According to news reports Asian exporters have seen their cargo pile up at the docks next to empty ships as they fail to get the necessary bank guarantees or letters of credit to ensure their exports reach their intended markets.

Trade Finance approached a panel of specialists to ask whether these reports are true and if so how severe is the problem? Similarly, if trade credit is becoming scarce who will make up the shortfall? Are Asian exporters right to be concerned?

Roger Packham, regional head of trade finance, Asia Pacific, Deutsche Bank:
"Whilst Asia is not immune to the global economic slowdown, the current environment, and corresponding shortage of liquidity to support global trade, it has in fact prompted the increased use of traditional trade instruments, such as letters of credit assources of funding/financing.

"Corporates with existing credit lines will generally find no issues getting the funding. However,...

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