The ICC Trade Register is a benchmark dataset and analytical resource that captures default rates, loss-given default (LGD) metrics, and maturity/volume data for trade finance instruments globally. With support from organisations such as Boston Consulting Group (BCG) and Global Credit Data (GCD), the Trade Register helps banks, regulators, and other stakeholders assess risk in trade portfolios, and supports the argument that trade finance remains a relatively low-risk asset class. The "Market Commentary" acts as the opening note to the dataset and highlights key trends, risks and opportunities in the trade finance landscape for 2025.
One of the headline messages is that default rates for major trade finance products i.e., letters of credit (LCs), guarantees, trade loans, remain at historically low levels. For example, the Market Commentary quotes overall defaults at below 0.3%. This continues to support the narrative that trade finance remains a strong, resilient form of funding, especially important in times of global uncertainty.
While overall risk remains low, the data show that certain segments and regions are experiencing a notable uptick in defaults. For instance: Import LCs and trade loans show higher default rates when weighted by transaction/obligor rather than exposure. And, the Asia-Pacific region shows a "notable uptick" in defaults, indicating increasing stress in supply-chain financing in that geography. These findings highlight the continuing importance of obligor selection, regional and sectoral risk analysis, especially in SME-driven trade.
The commentary points to regulatory and capital-treatment implications for banks. Notably, with the advent of Basel 3.1 / output floor changes, trade finance assets are likely to attract higher capital charges. Because of this, banks may increasingly adopt "originate-to-distribute" models, shifting risk via secondary markets or off-balance-sheet structures. Supply chain finance (both payables and receivables) continues to grow, but volumes for documentary trade (traditional LCs) are growing more slowly.
Despite the growth of other trade-finance methods, the report asserts that documentary trade (e.g., LCs, guarantees) will remain a core part of the market well into the 2050s. This is an important reinforcement of the traditional model in a world increasingly focused on supply-chain finance or digital structures.
The low default environment is positive, but the regional upticks and SME-driven risks suggest that banks cannot be complacent. Exporters, importers, funders and advisors should closely segment portfolios by region, size of counterparty, product type; monitor obligor trend data rather than simply exposure-weighted averages; pay attention to maturity and concentration risk: shorter maturities and well-diversified obligors remain key.
Given increasing capital costs, banks should refine pricing to reflect capital cost, liquidity and operational risk, not just default risk; consider developing structures that allow distribution of risk (e.g., trade-finance securitisations, SMF (structured trade-finance) programmes); embrace digital-document workflows and data analytics to reduce time-to-originate, reduce operational cost and support scalability, as noted by the ICC.
While supply-chain finance is growing rapidly, the commentary underlines that documentary trade remains vital. For practitioners, maintain capability in LCs and guarantees and view them as complementing newer models rather than being replaced; use digital innovations to improve the traditional instruments (e-documents, automated checking); ensure banks and corporates don't abandon LCs prematurely just because other methods appear glossier, there is still a role, especially in volatile or opaque markets.
The commentary also emphasises that speed, data-rich workflows and digital connections will increasingly determine competitive advantage. The faster a trade-finance desk can originate, price and distribute with high-quality data, the better. Corporates and banks alike must invest in data standards, digital documents (e-trade), automation and risk-analytics.
The ICC itself notes that participation in the Trade Register is still limited, with some geographic skew (many banks headquartered in Europe) which may influence representativeness. While aggregated default rates are low, risk among smaller counterparties remains higher and less visible in headline numbers. Capital regime changes may force product evolution that changes risk profiles and returns in trade finance. The environment remains uncertain (supply-chain disruptions, regulatory intervention, protectionism), so though defaults are low today, practitioners must remain vigilant.
The ICC's 2025 Market Commentary via the Trade Register delivers an encouraging message: trade finance remains robust, with historically low default rates, though not immune to regional stresses or rising capital cost pressures. For banks and corporates, the challenge shifts from default risk to operational excellence, capital efficiency, and digital-data enabled workflows. The instruments of yesterday (LCs, guarantees) remain relevant, though their competitive edge will increasingly come from integration with new methods and tools.
In short: risk may be low, but speed, data and capital treatment will determine who wins in trade finance in the coming decade.
https://iccwbo.org/wp-content/uploads/sites/3/2025/10/ICC-Market-Commentary_Trade-Register-2025.pdf