Leases/Installment Sales Denominated in Local Currencies
SMFL provides leasing and installment sales transactions denominated in the foreign currency of the region where its overseas affiliates are located
Outline of the Transactions
- In regions where SMFL has an overseas subsidiary, SMFL can respond to requests for transactions denominated in local currencies (such as leaseback arrangements).
- The client’s overseas subsidiary concludes a purchase contract with a manufacturer (dealer), and an order is placed for the item.
- SMFL and the client’s overseas subsidiary conclude a purchase contract, and, at the same time, a lease contract.
- The leased item is delivered directly to the client’s overseas subsidiary from the manufacturer (dealer).
Features and Advantages
- The term of the contract can be set to match the cash flow plans of the customer’s overseas subsidiary.
- These arrangements can be used when the customer’s overseas subsidiary is planning to make new capital investments and in other cases, such as in arranging for leaseback of existing equipment, thus providing for flexibility in the diversification of funding sources.
- Also, by arranging for the payment of lease rent in local currencies, customers can reduce foreign currency risk.
- Moreover, the client’s overseas subsidiaries can continue to enjoy the benefits of investments including tax and other incentives they have already obtained.