Since September 2008, and the collapse of Lehman Brothers, not a
day seems to pass without news of the impact of the global
financial crisis upon markets. In this article, Eurof Lloyd-Lewis
looks at how international trade contracts may be affected by the
current crisis.
Earlier this year, however, in contrast to the equities sector,
the credit crunch had appeared to bypass the commodity markets
which were putting in a stellar performance with prices hitting
historic highs.
However, the Bull Run came to a sudden and abrupt end in late
July/early August 2008. The resulting turmoil has been further
exacerbated by the liquidity problems encountered by many banks,
some of which provide trade finance. Prices have gone into freefall
and the spectre of counterparty default and insolvency appears to
haunt every transaction. Few traders have been unaffected by the
turmoil; transactions have been restructured or renegotiated or
there has been the complete failure of
