Nokia Siemens Networks is a leading global enabler of telecommunications services. With its focus on innovation and sustainability, the company provides a complete portfolio of mobile, fixed and converged network technology, as well as professional services including consultancy and systems integration, deployment, maintenance and managed services. It is one of the largest telecommunications hardware, software and professional services companies in the world. Operating in 150 countries, its headquarters are in Espoo, Finland.
Photo of Richard Parkinson and Matthew Davies, Bank of America Merrill Lynch accepting on behalf of Nokia Siemens Networks.
Rudraprasad Kundu
Structured Finance, Asia Pacific and India Regions
Nokia Siemens Networks is a leading global enabler of telecommunications services. With its focus on innovation and sustainability, the company provides a complete portfolio of mobile, fixed and converged network technology, as well as professional services including consultancy and systems integration, deployment, maintenance and managed services. It is one of the largest telecommunications hardware, software and professional services companies in the world. Operating in 150 countries, its headquarters are in Espoo, Finland.
The Structured Finance team within Nokia Siemens Networks provides professional financial advice, and arranges short to long-term financing for its clients to enable their procurement and network rollout.
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Nokia Siemens Networks (NSN) regularly supplies telecommunications network equipment and services to leading operators in Vietnam.
In order to manage credit and country risk, NSN often receives Letters of Credit (L/Cs) issued by Vietnamese banks and has them confirmed by other global banks. In one such transaction, a significant sized long tenure L/C needed to be confirmed.
NSN often manages country risk effectively by employing risk mitigation strategies. With Bank of America Merrill Lynch (BoAML) having a well-established presence in Asia, they were well positioned to help NSN manage and mitigate some of the risks associated with L/Cs.
By working closely with parties like the Asia Development Bank (ADB), BoAML, and the local L/C issuing bank, NSN was able to execute the L/C transaction successfully. ADB agreed to provide cover under the Trade Finance Programme (TFP) despite multiple drawings, total tenor and performance risk in the underlying L/C. The project was also driven by BoAML’s willingness to retain a share of the value of the transaction instead of requiring 100% cover from the ADB.
BoAML linked up ADB to execute the necessary documentation, using ADB as the confirming bank under the Trade Finance Programme. ADB, a Manila-based multilateral financial institution that supports international trade in some of Asia’s most challenging markets, provided guarantees under the TFP to guarantee banks for up to 100% risk protection against non-payment by approved domestic issuing banks.
BoAML approached ADB to provide cover for this transaction and also the issuing bank for their consent to employ the TFP.
Additionally, the L/C issuing bank in Vietnam now considers BoAML a capable confirming bank for their more difficult and long-tenor L/Cs, which helps them better serve the importers which supply capital goods to south-east Asia.
“With a limited risk appetite for Vietnam, we used Bank of America Merrill Lynch to reduce that risk by transferring a part of that out of Vietnam onto other counterparties. In BoAML, we have found a reliable and additional source to mitigate Asian bank and country risk, especially for difficult markets. This has been a win-win partnership for all parties involved.” says Rudraprasad Kundu, Head of Structured Finance at Nokia Siemens, Asia Pacific and India Regions.
