One worked example, with the rules running
A transaction, running
A model is worth something when it can come back wrong. This one runs the rules a lender actually applies to a financed coffee position, and refuses when they are not met, citing the article each refusal comes from.
The rates and reserves are yours to set. Put your own in and the arithmetic stops being an example and starts being your facility.
Change one thing, and watch what a lender can lend against it.
Sixty million dollar revolving facility. Twenty million of green coffee in Antwerp, in three lots under three different control regimes. This is the calculation a treasurer signs every month, with the rules that govern it expressed as refusals rather than as footnotes.
Everything is editable. Put your own advance rates and reserves in and the arithmetic becomes yours. Every refusal cites the article it comes from.
| Lot | Control | Market value | Rate | Counts for |
|---|---|---|---|---|
| Vietnam Robusta1,200 t · Antwerp, ICE nominated | ICE warrantICE GWP F 2.4.1, F 2.6.1 | $5,040,000 | 90% | $4,536,000 |
| Colombia Arabica900 t · Antwerp, third-party store | Collateral managementBelgian Pledge Act, art. 39 | $7,142,969 | 85% | $6,071,523 |
| Brazil Arabica1,000 t · Antwerp, own yard | Own yard, registered pledgeBelgian Pledge Act, in force 1 Jan 2018 | $7,583,893 | 70% | $5,308,725 |
As the borrower
As the lender
Borrowing base certificate
- Stock at market
- $19,766,862
- Eligible, after advance rates
- $15,916,248
- Formula reserve, 5%
- ($795,812)
- Discretionary reserve
- ($250,000)
- Borrowing base
- $14,870,436
- Drawn
- ($13,500,000)
- Available to draw
- $1,370,436
Nothing refuses. Every lot is paid for, weighed inside six months, and where it was graded.
Three lots and five rules. Argent, Aurum and Ferrum carry twenty-three control acts and eleven invariants, on Soroban, Daml and Corda, and the same conformance test: fold the evidence records in sequence and arrive at exactly the state the ledger holds. What stage three builds is this, for your transaction, with your rules.