MUMBAI, May 22: Westmerchant Bank, the -- 415 crore UK-based financial intermediary, will enter into a strategic alliance with the Export Credit and Guarantee Corporation (ECGC) to market Indian trade papers in Europe.

The trade papers are issued by the ECGC to cover the export risk of Indian entrepreneurs. The move will open up the international secondary market for the country's trade papers.

WestMerchant Bank managing director Michael J Dunne confirmed that a dialogue with ECGC had been initiated on the issue. The international finance house is keen on the business complimenting its forfaiting operation in the country.

According to Dunne, European financial institutions have a strong appetite for Indian trade papers. "We would like to take the opportunity to place trade papers primarily with banks, pension funds and insurance agencies," he said. Preliminary surveys have found that Indian papers are acceptable to international investors.

"One can easily get a return of around 50 to 60 basis points above libor on these papers," Dunne said. Initially, the institution will help ECGC with a structured programme to develop these papers and make them acceptable in the global market.

ECGC now covers between 80-90 per cent of the risk. With technical support of Westmerchant bank, Indian exporters will be able to get a 100 per cent risk cover from ECGC.

WestMerchant Bank also plans to participate in the domestic equity market by introducing derivative products. "We would be interested in launching a string of financial products and prefer to act in tandem with the domestic financial institutions," Dunne said.

The institution has a long experience in developing finance products in the emerging markets. That apart, the bank has an extensive placement capability, based on its sales force in London, New York and Singapore. It also offers sophisticated export finance products for major capital projects. This involves structuring and arranging aid and export finance-based packages.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.