White Paper: Commodity Trade Finance


Often when we speak about innovation in finance, our attention is drawn to something novel or unique: new structures, new markets, and most recently, new currencies. It is not often that institutional investor interest is piqued by an age-old form of credit, principally directed at SMEs. Yet over the last decade certain regulatory advances have created a market for non-bank lenders to enter Commodity Trade Finance- a previously closed space- and generate solid and predictable yields. Capital has come into the asset class in size and at pace. In these good times, managers have proliferated. More recently, however, a few have encountered difficulties and some high-profile managers have shut up shop.

In this brief whitepaper, Alvine Capital will seek to discuss the asset class and examine its merits and pitfalls, scrutinize its participants and consider its future in light of recent growth and history. Ultimately, we will recommend continued or additional exposure to trade finance so long as certain criteria can be met.