Linking Urea Purchase Contracts to 120-Day Bridge Loans and Future SBLCs
Global fertiliser trades hinge on timing: producers ship urea FOB Middle East; importers in African and Asian markets pay later via SBLC once government subsidy budgets release. A 120-day short tenor bridge loan
keeps shipments moving while the buyer’s bank prepares the standby.
1 Contract Structures
- FOB with seller’s vessel:
importer charters, pays freight.
- CIF turnkey:
supplier covers freight & insurance.
Bridge loan size equals 85-90 % of FOB cargo cost plus freight, repaid from SBLC draw or end-buyer payment.
2 Tenor Design
Voyage Middle East → East Africa: 15 days.
Customs + inland: 10 days.
State fertiliser agency payment: 60–80 days.
Buffer: 15 days.
Total tenor: 100–120 days.
3 Transition to SBLC
Bridge lenders issue a comfort letter to the seller; parallel team at Financely arranges SBLC issuance once buyer’s credit line confirmed. Assignment of proceeds ensures bridge lender first in line.
4 Collateral & Security
- Performance bond from supplier (2 % of contract).
- Inspection certificates—SGS on loading and discharge.
- Inventory pledge if cargo stored pre-sale.
5 Pricing Benchmarks
- Margin: SOFR + 325-375 bps.
- Up-front: 1.20 %.
- SBLC fee once issued: 0.9-1.4 % p.a. on face.
6 Risk Mitigation
- FX forward for local-currency subsidy flows.
- Political-risk insurance where sovereign rating < B+.
7 Example—30 000 MT Urea Cargo
- FOB price: USD 365/t → USD 10.95 m
- Freight & costs: USD 1.2 m
- Advance: 88 % → USD 10.7 m
- Cost (120 d at SOFR + 350 bps): ≈ USD 310 k
8 Financely Execution
We choreograph bridge + SBLC back-to-back using our 180-lender network, reducing cargo idle days and demurrage risk.
Finance Your Next Urea Shipment
Share contract draft, route, and buyer terms. Indicative pricing in five banking days.
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