J.P. Morgan and the Asian Development Bank (ADB) have signed the Credit Guarantee Agreement under ADB’s Trade Finance Facilitation Program (TFFP) to further enhance support for international trade in developing countries in Asia. The expanded partnership is designed to stimulate trade growth by extending trade financing to J.P. Morgan’s financial institution clients in emerging markets. Combined with the Risk Participation Agreement signed last year with ADB, this collaboration will enable J.P. Morgan to expand risk coverage in additional markets such Indonesia, Nepal and the Philippines.
“We are pleased to further broaden our partnership with ADB to help bolster trade flows to a wider range of Asian countries recovering from recent market instability,” says Yanti Agustin, Asia Pacific head of Global Trade Services, J.P. Morgan Treasury Services. “As a pioneering member of ABD’s Trade Finance Facilitation Program, we will continue to build upon our entrenched relationships with financial institutions in Asia Pacific by leveraging this important program to help our clients raise important trade financing.”
Under ADB’s Credit Guarantee Agreement, ADB provides guarantees to confirming banks like J.P. Morgan covering country risk as well as risk on issuing banks’ letters of credit (L/Cs) and other instruments in support of trade. Through the credit guarantee, ADB shares risk with confirming banks to provide comfort to exporting companies that they will in fact get paid for shipments to the most challenging Asian markets.
By using both facilities under the TFFP, J.P. Morgan is better positioned to support regional client banks in providing trade financing to importers and exporters in their countries and helping bolster country and regional commerce during today’s challenging economic conditions. The initiative is expected to have significant development impact by increasing funding for trade of consumer goods, intermediate goods, small machinery and commodities demanded by emerging market enterprises.
This program will broaden J.P. Morgan’s risk mitigation capabilities and will enhance the profile of the underlying trade finance transactions as J.P. Morgan will be able to benefit from ADB’s AAA credit rating.
D.C.