Credit Risk of Commodity Companies
COURSE HIGHLIGHTS
Real Case Studies

Real company case studies to test your newly learnt skills

CPD Recognized

This course is Continuous Professional Development (CPD) recognized

Highly Interactive

Highly interactive with small group size and industry expert trainers


Credit Risk of Commodity Companies

Duration: 2 Days ･ CPD Points: 16 ･ Level: Intermediate

This course sharpens credit analysis skills for assessing the viability and risks of commodity traders and processors.



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Delivery Method Live Online
Location London
Dates 28-29 Nov 24
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Course Details

The purpose of this course is to enhance credit skills and equip participants with tools and techniques to understand a commodity processor or trader's commercial and financial viability and to appreciate the key credit, market and country risks which occur in commodity processing and trade transactions. 

Key Learning Outcomes:

  • Apply a structured approach to assess the creditworthiness of a commodity trader or processor.
  • Evaluate the performance of a commodity company using qualitative and quantitative frameworks and tools.
  • Assess credit risk exposures to commodity companies by appraising short term liquidity of trading operations as well as longer term ability to service debt for processing or storage activities.
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Course Content

Analytic Framework

Introduction of the four-step approach to any risk exposure: Purpose of transaction, sources of repayment, risks to repayment and structure of financial exposure needed to safeguard repayment.

  • Distinguishing pure traders, processors, integrated traders, finance and holding companies.
  • Identification of which stage of the business cycle is being financed
  • Sources of repayment for commodity producers and traders

Commodity Processing and Trading Sector

Key macro considerations when assessing the sector and operating environment in countries where commodities are sourced, processed and sold.

  • Country and sovereign risk including systemic governance and political influence and currency fluctuations.
  • Energy, agricultural (“soft”) and metal and mining (“hard”) commodities: Demand, production, price volatility, quality and logistics

Management and Ownership

The role and strategy of the management team as well the influence and control of shareholders or partners are assessed.

  • Management’s business and financial strategy and performance goals.
  • Corporate governance and reporting structure.
  • Group structure, use of joint ventures and ultimate ownership.
  • Quality of financial reporting and risk management.
  • Example of past mistakes

Business Profile

Understanding a commodity trader/processor business strategy in the context of sector, country of operation and shareholder requirements.

  • Diversification of commodities and geographical suppliers and end markets
  • Competitive position and operational scale and vertical integration
  • Market access, operational structure and asset ownership

Financial Profile – Assets and Profitability

Assessment of the asset investment need, and quality and stability of earnings and cash flows from operations (‘Business Risk’).

Asset Investment and Efficiency

  • Working capital management, cash conversion cycle and supplier finance
  • Trading cycle and different stages: Sourcing, transporting and warehousing
  • Net working assets: Readily marketable inventories, trade debtors and creditors
  • Processing, storage and transport assets: Expansion or replacement asset investment in on-balance sheet fixed and intangible assets
  • Industry specific utilization measures and off-balance sheet assets such as energy reserves

Earnings and Cash Flow

  • Commodity prices impacting revenues: Focus on volumes and gross profitability; Reflection of level of vertical integration on profitability
  • Impact on performance by non-operating items.
  • Looking beyond EBITDA at sustainability of funds flow from core operation – before changes in working capital.

Financial Profile – Funding Structure and Financial Flexibility

Evaluation of the appropriateness of a company’s funding structure and ability to service its financial obligations (‘Financial Risk’).

Capital Structure and Funding Instruments Used

  • Financial discipline and dependency on external financing.
  • Importance of seasonality and timing of financial year end on reported debt.
  • Funding instruments used, tenor, currency of the debt and any off-balance sheet financial obligations.
  • Commodity trader adapted financial leverage measures and comparison with the business risk from operations in the industry

Financial Profile – Financial Flexibility

  • Market risk exposure, hedging strategies and potential impact on cash flow and debt servicing capability.
  • Refinancing risk and liquidity: Ability to meet short-term financial obligations as they fall due from current operations.
  • Long term debt service capability for commodity processors

Structure of Commodity Based Lending

Overview of main elements of commodity finance. This topic is not covered in detail as the focus of the course is the counterparty risk analysis

  • Structured commodity finance: Pre-export, supply chain, factoring, countertrade, inventory finance
  • Ranking: Different ways to achieve seniority or pari passu ranking vs. other capital providers
  • Safeguards: Risk and mitigants in commodity finance
  • Pricing fundamental for long term debt issuers: Bond and loan prices
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Who Should Attend?

Anyone with an interest in building or further enhancing their analytic skills of commodity processors and traders.  Financial professionals in a credit risk, asset investment or relationship management role, as well as those engaged in the assessment of counterparty risk from an underwriting viewpoint or trade debtor exposure. Regulators or those in a supervisory role with an interest in understanding the underlying credit assessment needed in the organizations or departments they assess. Participants are expected to be familiar with corporate financial statements. We provide a separate Fundamentals of Corporate Financial Statement Analysis course that can be followed to refresh or introduce the main concepts of financial statements and ratios.

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Course Highlights

Real Case Studies

Real company case studies to test your newly learnt skills

CPD Recognized

This course is Continuous Professional Development (CPD) recognized

Highly Interactive

Highly interactive with small group size and industry expert trainers

Frequently Asked Questions

Currently, course can be taken either in an in-person setting or in a live online setting.

Our virtual live online courses are designed to keep the same levels of engagement and networking as our in-person courses. You will attend the course virtually on a set date, at a set time.

What time zones do the courses run in?
Currently, we run live online training across London, New York and Singapore time zones.

How are the courses delivered?
We deliver virtual training via Zoom.

What are the start times?
The courses will run during scheduled class times, and vary per course.

Reclaiming VAT
Most delegates who attend our courses in the UK are able to claim back their VAT once it has been paid. The below information details why we need to charge VAT and how you can claim it back.

Why does Fitch Learning charge VAT?
The EU VAT Directive (Council Directive 2006/112/EC) article 53 says that for the right of entry to cultural, artistic, sporting, scientific, educational, entertainment or similar events in exchange for a ticket or payment, the place of supply is where the event physically takes place. Since, the event is held in the UK, the place of supply is the UK and therefore UK VAT has to be charged.

How can you claim back the VAT you paid for a course?
The most efficient way to claim back VAT is directly through the UK’s HM Revenue and Customs (HMRC) by completing the required forms and sending back to HMRC.

Please follow the links below for further details;

EU businesses
Non-EU businesses
To claim back VAT or if you have any questions please contact HMRC;

Telephone - 0044 (0) 3000 537 381

Email Overseas Repayment Unit - enq.oru.ni@hmrc.gsi.gov.uk

On the Fitch Learning website you will find learning paths which will explain the courses available at different levels within a topic area. We would always prefer to speak with you to discuss which course is most appropriate rather than run the risk of you signing up for an inappropriate course. If you are unsure, please contact the Public Courses team:

Phone: +44 20 7496 8600
Email: enquiry@fitchlearning.com

All of our instructors are industry practitioners turned trainers. Their training style is case study based and interactive. They will coach, challenge and inform participants to ensure immediate and practical real-life application from the courses. To discuss our instructors further please email enquiry@fitchlearning.com

Class sizes are dependent on the course, but are small enough to permit active interaction and participation.

Q. Am I able to gain CPD/CE/CPE credits for my course?
A. We award continuing professional development credits for the following:

Global
CFA Institute
The CPD Certificate Service
UK
CFA Society
The CPD Certificate Service

Q. What do I need to do to receive my credits?
A. Please email enquiry@fitchlearning.com to request a certificate. Fitch Learning will send you a certificate stating how many points you are eligible for.

Q. How many credits will I receive?
A. We award 8 credits (7 for the CFA) for each day of training you attend.

You will be contacted by email within 2 working days of processing your registration to confirm your place on the course.

In order to optimise class time we ask participants to read some background information on the main illustration case(s) prior to attending the class. This also helps to ensure that all are able to participate in case discussions. In some cases additional background reading is provided. The length of pre-course reading is advised to participants in advance and typically ranges from 2-3 hours.

We try to send out the pre-course reading by email one week before the start of the course. There may be a delay in sending this out due either to late registrations or to the fact that the case study needs to incorporate recently-published financial information.

Q. If I am unable to attend can I send a substitute?
A. Absolutely and it is completely free of charge. We do however ask that we have at least 2 working days’ notice of this change before the course start date. Please email enquiry@fitchlearning.com with full contact details of the substitute and who they are replacing.

Q. Can I transfer my booked course to another date?
A. Yes you can. If you email us your request to transfer to the next available course date and give us more than 30 days’ notice, there will be no charge. If you notify us within 30 days of the course start date, there will be an additional payment of 25% of the course fee, provided the original course fee has been paid in full.
A transfer can only be made onto a course taking place within a period of 6 months of the original course date and only one transfer can be made in respect of any booking.

Q. Can I cancel my course booking?
A. Yes. If you email us with your request more than 30 days before the course start date, there will be no charge. If you notify us within 30 days of the course start date you are liable for the full course fees.

Q. What happens if I do not attend my course?
A. If you do not attend your course and you do not give us any prior notice you are liable for the full course fee and no refunds can be given.

Notice contact details:
Email: enquiry@fitchlearning.com

We can develop a customized training solution to meet your learners' needs - at all levels in your organization. Please email enquiry@fitchlearning.com for more information.

Please get in touch with us via email at enquiry@fitchlearning.com to request more information on running one of our courses in-house for larger groups.

Discount offers cannot be used in conjunction with each other or any other offer nor applied retrospectively to anyone already registered for any Fitch Learning course.

To speak to a member of our team, please get in touch via the below:
Phone: +44 20 7496 8600
Email: enquiry@fitchlearning.com

Q. How do I make a complaint?
A. Anyone who wishes to make a complaint may do so in writing. Complaints need not be made to the actual service which is the subject of the complaint. In the first instance complaints should be sent to Grace Heighington, Head of Public Courses.

Q. Where do I send my complaint?
A. Complaints can be submitted using the following options:
Email: enquiry@fitchlearning.com
Post: Grace Heighington, Fitch Learning, The Corn Exchange, 55 Mark Lane, London, EC3R 7NE
Wherever possible and appropriate, staff are requested to elicit from the complainant the nature of the complaint, as well as the actions the complainant feels are necessary to resolve the complaint.

Complaints Policy and Procedure
Q. What are the stages involved?
A. There are two main stages to our complaints procedure:

Stage 1 - We always try to resolve issues quickly. From the moment we receive your complaint, we must get back to you within three working days. At the very least we must acknowledge the problem in writing and give you the name of the person dealing with the complaint. We must give you a full reply within ten working days if possible, or keep you fully informed of the progress and reasons for delay.

Stage 2 - If you are not happy with the full response at Stage 1, please contact us again. One of the Managing Directors will then review the issue. You can expect our acknowledgement within three working days of us receiving your complaint. We will also explain how long the director's review will take.

What Our Customers Say

"Extremely useful and relevant. Up to date with ongoing industry developments." DAPHNE TAN, CREDIT AGRICOLE

"Fun, interactive, practical and knowledgeable." BONNIE CHOW, ZURICH FINANCIAL SERVICES AUSTRALIA LTD

"Great experience, and added value to my work." REBECCA WANG, MIZUHO BANK

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