Under a Collateral Management Agreement, the owner of a merchandise inventory surrenders control of his goods to PANORMOS Intl, who in turn is committed to follow exclusively the instructions of a third party (usually a lender) with regards to this stock.
The main objective of such a structure is to allow the merchandise to be used as collateral security to a loan.
This basic configuration can be adapted to fit multiple situations, from inventory management support to complex multipartite transactions.
With PANORMOS Intl as Collateral Manager often makes financing possible where it would otherwise not be.
By mitigating country risk, replacing (or adding security to) balance sheet financing, and reducing other risks, Collateral Management may at times lower the financing spread applicable to a transaction.
Collateral Management is a recognised risk mitigation mechanism under the Bank for International Settlements Basel II accords.