The BAFT-Master`s 2008 participation agreement was updated in 2018 to allow for greater consistency in business transactions and to update it to make it relevant to current requirements in the trade finance sector. Packageing, also known as trade packages, is a means of obtaining liquidity in trade finance, where exporters receive liquidity by selling their receivables abroad (medium and long term) at a discount and on "no recourse". In principle, without recourse or not, the package takes care of and accepts the risk of non-payment. In this case, a packager is a specialized financial institution or banking department that carries out export financing transactions without resorting to the purchase of medium- and long-term debts from an exporter. In this case, a master risk-taking contract can be used to transfer a lender`s interest on a borrower`s receivables to a participant. In the package, a borrower`s receivables are usually guaranteed by the participant, the importer`s bank. Simply put, if a seller violates one of these obligations, the participant uses the seller. And if the seller complies with his obligations, the risk is shared. Export credit insurance financing is an insurance credit facility issued by a lender to an exporter to protect the exporter from the risk of non-payment by a foreign importer. Export credit insurance can be short-term or long-term.
This financing facility can be transferred to a participant through a master participation contract. Although the concepts of "participation" and "unionion" are often used in a synonymous manner, it should be noted that there are significant legal and structural differences between risk-taking and syndicated loans. The difference between risk participation and syndicated credit lies in the lending structures used in the two financing agreements. The initial agreement on participation in the BAFT master`s degree was launched in 2008. It is based on English law and should be the industry`s standard document for transactions to facilitate the purchase and sale of commercial financing assets worldwide. The Bankers` Association for Finance and Trade (BAFT) was founded in 1921 and is an international financial trade association that is held around the global financial community. Its membership consists of international financial institutions and companies that are actively involved in global and commercial financing. On the other hand, as part of the credit syndication, a borrower enters into a single credit contract with a group of lenders. This single credit agreement covers all loan facilities made available to the borrower by the various lenders.
Every lender of a syndicated loan has a direct legal and contractual relationship with the borrower.