Financial drought. (Trade Talk).

How tough is the trade finance market in Latin America these days? Less than two weeks after the Inter-American Development Bank launched a US$1 billion credit program in early March, the multilateral bank announced it was raising loan rates to 50 basis points from 10 basis points.

Borrowing using dollar receipts as collateral is one of the most expensive routes to financing, but even this type of borrowing was down in 2002. According to credit rating agency Fitch, so-called structured finance dropped by almost half to $3.6 billion in 2002.

Even multilateral lending agencies have felt the pinch. Last year, the World Bank provided flexible payment terms on its guaranteed lending program to Argentina. The bank extended the repayment period to five years from 60 days, damaging investor confidence in the World Bank's ability to command respect as the lender of last resort.

That's not to say that companies aren't still looking for money. Brazil's Petrobras is planning a $200 million issue. It was the single-largest borrower in Latin America during 2002, raising $800 million in financing. Companhia Vale do Rio Doce, a Brazilian iron ore giant, also recently raised $150 million with a 10-year loan from the Japan Bank for International Cooperation .