Collateral Management Services - Warrants & CMA

The collateral management area was developed in order to offer a complete service to banks, financial entities, trading companies, insurance companies, and companies in general. Thanks to our network of specialized inspectors located throughout the country, we are prepared to offer tailor-made solutions wherever they are needed.

The CMA (Collateral Management Agreement) is a private contract, with at least three parties, in which the general conditions of a specific credit and/or guarantee operation are expressed.

In Argentina, the Warrant and Certificate of Deposit (Law 9643) is the legal instrument that we use as a basis (although not exclusively) for the design and structuring of our CMA guarantee schemes.

Control Union is authorized as a company that issues warrants and certificates of deposit and has been operating in Argentina with said instruments since 1994, being the market leader in Argentina and the entire LATAM region.

Parties included in a CMA contract:

• Depositing debtor: It is the owner of the merchandise offered as collateral.

• Creditor: Banks, Funds, Traders, Insurance Companies, Suppliers of Products or Services.

• Collateral Manager (Control Union): Is the one who assumes full responsibility for the merchandise granted as collateral in the operation. Control Union inspects, monitors, custody and reports on the merchandise given in guarantee, under pre-established conditions depending on the type of guarantee and the obligations established.

• Owner of the warehouse (possible): Is the person who eventually gives the warehouse to Control Union for the purpose of acquiring the exclusive use and legal control of the same during the entire term of the operation (it is not always an additional party within the the operation given that the depositing debtor many times is in turn the one who has the property and/or control of the deposit and is consequently the one who assigns it in favor of Control Union) Likewise, their participation is not necessary in those cases where it operates in Control Union's own warehouses.

There are 4 main elements within a CMA contract:

1. Type of guarantee/merchandise;
2. Merchandise storage place;
3. Term contract;
4. Parties Obligations.

What is a Warrant?

We invite you to watch this 2-minute video that explains the main benefits of this instrument.

 

In short, the warrant is an instrument by which a company can use its merchandise as collateral to obtain financing from third parties (both commercial - from suppliers or customers - and financial).

The use of this tool has various advantages for both the depositor and the creditor.

Main advantages for the depositor

It allows greater access to credit, under preferential rates and higher credit limits and terms, also benefiting from an outsourced monitoring service for your merchandise.

You benefit from taking out first-line insurance with coverage for all operational risks.

You can wait for the right moment (best price) to sell your production and/or use the financing obtained to adapt to markets with marked commercial/logistic seasonality that cause significant imbalances in the cycles of income and expenditure of funds of the companies.

Main advantages for the creditor

It has a real guarantee of extrajudicial liquidation backed by a law with more than 100 years of existence and jurisprudence (Law 9643 – Year 1914), whose execution (in case of non-compliance) is not suspended due to death, incapacity, bankruptcy or preventive bankruptcy of the debtor.

Certain warrants (issued on fungible goods that have a normal and habitual price in local or international markets, widely distributed and easily accessible to the public) allow financial entities to classify them as Preferred Guarantee "A" according to BCRA regulations.

The merchandise under warrant is insured and remains in the custody of a company specialized in storage and administration of merchandise under guarantee.


Main products we work with: