LTP Trade Finance IndexÖ - July performance update

The LTP Trade Finance IndexÖ - the independent total return index covering the trade finance asset class - was dominated by two very clear trends during the early part of 2001. On the one hand, credit spreads widened as the emerging markets struggled to cope with the US-led slowdown. On the other, regular cuts in USD Libor provided some respite, but could not prevent a steady fall in our total return index. This pattern changed temporarily in May as good news from Argentina (the debt swap) and Turkey (the new IMF funding) prompted a fall in average spreads for the first time this year. Unfortunately this recovery was short-lived, as fresh difficulties in both these countries forced the average risk premium on trade finance assets to rise again in June - and again in July.