The $3 Billion Broker in Trade Finance no one has heard of – Payables.X


According to International Asset Transactions LLC (IAT), they have been dedicated to making illiquid (non-tradable) financial assets tradable since 1988.  IAT claims to have pioneered making  trade receivables accessible for traditional capital markets investors through their Short-Term Depositary Receipts (“STDRs”)   program and states this program has provided liquidity for the receivables of suppliers of over 60 major investment grade companies worldwide (Buyers) including companies such as 3M Co, Abbott Laboratories, AT&T, Anheuser-Busch InBev NV, Apple, Baxter, and many more.

They claim to have completed $3.0 billion of depositary receipt programs since their inception with an estimated secondary market trading volume of $10.0 billion.

So just who is behind this company that is supposedly providing liquidity to suppliers of these large global companies?  The truth is no one really knows.   It appears to be a broker.

The technique for funding is very similar to Approved Payable Finance programs, where large investment grade buyers upload approved invoices to banks or platform providers like PrimeRevenue for funding at Libor + rates for their suppliers.  But the twist is unlike the direct purchase of a receivable,  IAT claims tens of millions of dollars of STDRs are issued and proceeds are used to purchase underlying supplier invoices, which have been approved for payment by Buyers.  Their website says STDRs can be issued in U.S. dollars, Euros, Pounds Sterling and other major currencies.  Liquidity is provided by money fund investors, insurance companies, family offices, companies, banks and other short-term investors, including sovereign wealth funds.  STDRs settle T+2 (in some instances, same day) via Clearstream, Euroclear and DTC which means suppliers receive proceeds T+3 or same day.

Perhaps they are a broker for Orbian.  It is not clear.

This is precisely why I started the Alternative Business Finance index, to help separate fact from fiction.  Do you recall when Tradeshift announced a $3 billion fund with Capital Aid?  I do.  This is the hype we all have to sift through.

While there is much hoopla about everything fintech and every investor seems to invest in trade receivables, the truth is far different than what is presented.

We at Trade Financing Matters will be there to help the market understand this emerging space for business credit.

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