What is pre-export finance (PXF)?

PXF is an established structure used to provide finance to producers of goods and commodities. It is a type of structured trade finance (see Practice Note: Introductory guide to structured trade finance).

PXF structures were borne out of the fact that traditionally, many producers of goods and commodities, particularly in emerging markets, were not considered to be sufficiently bankable for the purposes of obtaining finance by more orthodox means, such as conventional corporate loans against the balance sheet of the borrower.

In a classic PXF facility, funds will be advanced by a lender or syndicate of lenders (in this Practice Note, 'lender' refers either to a single lender or a syndicate of lenders) to producers to assist them in meeting either their working capital needs (for example, to cover the purchase of raw materials and costs associated with processing, storage and transport) or their capital investment needs (for example, investment in plant and machinery and other elements of infrastructure).

A typical PXF facility will have a tenor of between one and five years, although it is also common