ABC Frankfurt Carried Out The First “Structured Cang-Rong-Tong ...

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You are here：Home > News Text Size:[L M S] ABC Frankfurt Carried Out the First “Structured Cang-Rong-Tong” Product

ZIJIN COPPER CO., LTD. is one of ABC Fujian Branch's VIP customers. In December 2014, with the L/C of USD 18.8 million issued by ABC Fujian Branch, the company imported some blend copper concentrates from Peru. In early January of 2015, when the L/C was due for payment, the company contacted ABC Fujian and ABC Frankfurt expressing their refinancing need for 3 months from overseas.

At that time, the Euro interest rate is much lower than other currency's interest rate of the same tenor in the market, for instance, 3M Euribor is 18bp lower than 3M Libor. In this context, ABC Frankfurt designed a "structured Cang-Rong-Tong" product. That is, ABC Frankfurt providing Euro financing for the customer, while through currency arbitrage, making payment in USD under L/C. For the customer, it may just lock the exchange rate for repayment in RMB at maturity to ABC Frankfurt.

By means of the new "structured Cang-Rong-Tong" product, the customer successfully acquired US Dollar financing under a lower cost of Euro interest rate with only a few extra expenses for future exchange arbitrage. The " structured Cang-Rong-Tong" can effectively reduce our customer¡¯s financing cost and strengthen the competitiveness of our trade finance products. It was a good start for both ABC and the customer especially during the time when Euro interest rate keeps low.

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