Finnvera s export financing

Size: px

Start display at page:

Download "Finnvera s export financing"

Osborne Morgan
10 years ago
Views:

1 Finnvera s export financing

2 Diverse export financing services for export companies and financiers The official Finnish Export Credit Agency Finnvera promotes exports by providing companies and banks with an extensive range of export financing services ; Export credit guarantees protection against credit risks arising from exports ; Financing of export credits and interest rate equalisation through Finnish Export Credit, a subsidiary of Finnvera. Finnvera is a specialised financing company owned by the State of Finland. Finnvera complements the financial markets and shares risks with exporters and banks. Finnvera s premium income covers its operational expenses and indemnities resulting from export credit guarantee activities. The State bears the final responsibility for Finnvera s export credit guarantee commitments. Finnvera acquires the funds needed for financing export credits from capital markets. Export credit guarantees protect from credit risks and facilitate financing arrangements for exports Finnvera s export financing supports companies in international competition. The guarantees and other services can be used in close

subsidiary of Finnvera. Finnvera is a specialised financing company owned by the State of Finland. Finnvera complements the financial markets and shares risks with exporters and banks.

4 cooperation with other financiers to structure financing solutions meeting the needs of exporters. Guarantees for exporters The Export Receivables Guarantee is insurance for exporters selling to their overseas buyers on short-term credit (repayment period under 2 years). The guarantee provides protection against non-payment by the buyers. The guarantee covers commercial risks associated with the buyer as well as political risks associated with the buyer s country. Normally Finnvera cannot grant short-term credit insurance for exports to EU Member States and some other OECD countries. The Credit Risk Guarantee is comparable to the Export Receivables Guarantee but it can also be used for export transactions with a repayment period of two years or longer. In addition to post-delivery credit risks, the Credit Risk Guarantee can be used to cover pre-delivery risks, such as cancellation of a contract during the manufacturing of the goods. The exporter can transfer the right for indemnification under the Export Receivables Guarantee or Credit Risk Guarantee to a bank or a factoring company as security for accounts receivable financing. This means that the exporter gets part of the contract price on cash terms. Guarantees for banks financing exports The Buyer Credit Guarantee is security for a bank that gives a loan to a borrower to finance an export transaction. It provides protection against credit risks arising from the foreign borrower and the borrower s country. The exporter receives payment for the goods on cash terms, and the bank can transfer the credit risk to Finnvera. The Buyer Credit

The guarantee provides protection against non-payment by the buyers. The guarantee covers commercial risks associated with the buyer as well as political risks associated with the buyer s country.

5 Flexible financing solutions for our client enterprises for exports to over 80 countries. Guarantee is particularly suitable for financing arrangements in capital goods exports. The Letter of Credit Guarantee is granted to a bank that is confirming a letter of credit opened by a foreign bank. It covers the risks associated with the opening bank and the opening bank s country. The Bank Risk Guarantee is security for a bank issuing a bank guarantee to an exporter. The bank guarantee is counter-guaranteed by the buyer s bank. Finnvera s guarantee covers commercial risks arising from the buyer s bank and political risks arising from the country of the buyer s bank. The Finance Guarantee is security for a loan that a bank has granted to an exporter to finance working capital needs or to refinance a supplier credit that an exporter has given to a foreign buyer. The Bond Guarantee is security for a bank issuing a bid bond, an advance payment bond, a performance bond or a maintenance period bond in favour of a foreign buyer on behalf of the exporter. A Bond Guarantee can also be granted to an exporter as insurance against unfair calling of bonds. Small and medium-sized companies can also use Finnvera s Export Guarantees that meet financing needs pertaining to working capital and bonds. The Raw Material Guarantee is security for a bank financing the investments of a foreign raw material supplier. The Ship Guarantee is security for credits granted to Finnish companies engaged in shipping or shipbuilding. Shipping companies can use the guarantee for acquiring a vessel. Shipbuilding companies can apply for the guarantee as security for a loan taken for financing the construction of a vessel ordered by a Finnish shipping company.

The Bank Risk Guarantee is security for a bank issuing a bank guarantee to an exporter. The bank guarantee is counter-guaranteed by the buyer s bank.

7 Guarantees for investors The Investment Guarantee is insurance against political risks arising from investments abroad. Financing of export credits Foreign buyers of Finnish capital goods may require that post-delivery financing is arranged for the export transactions. Finnvera can offer financing for export credits through its subsidiary Finnish Export Credit. Banks have a key role in financing exports, as the bank chosen by the buyer negotiates the credit agreement and administers the credit. The bank arranges a long-term export credit according to the requirements of the OECD Arrangement on Officially Supported Export Credits, and transfers the credit to Finnish Export Credit. The buyer credit is always backed by Finnvera s export credit guarantee. Interest rate equalisation Overseas buyers of Finnish capital goods can use interest rate equalisation to ensure a fixed interest rate (CIRR) in their export credits. The interest rate and the financing costs of the credit are known at an early stage of the export transaction. The bank arranges and finances an export credit, acquires funds for it and concludes an interest rate equalisation agreement with Finnish Export Credit. Conditions for Finnvera s support ; Finnvera grants export credit guarantees for exports to creditworthy countries, and assesses the creditworthiness of obligors. ; Due to EU State Aid rules, Finnvera can cover short-term risks with a risk period of less than two years in the EU Member States and other industrialised countries only in very restricted cases. ; The exports supported must meet the requirement of Finnish Interest. ; If the repayment term of a credit is two years or more, the credit terms must adhere to the requirements of the OECD Arrangement on Officially Supported Export Credits. ; Finnvera s overall risk assessment covers the environmental and social impacts and risks involved in the projects to be guaranteed. ; The beneficiaries of guarantees and financing are required to sign an anti-bribery declaration. ; The interest equalisation and financing of export credits are available to financial institutions that have concluded a cooperation agreement with Finnish Export Credit. What is the cost? How to apply? Finnvera charges a risk premium for export credit guarantees. The premium is based on the creditworthiness of the obligor and the risk period. When the financing of export credits is involved, the interest rate of the credit is either a CIRR or a market rate. In addition, other financing costs will be charged. Further information about Finnvera s services as well as the application forms are available at

Finnvera can offer financing for export credits through its subsidiary Finnish Export Credit.

8 Financing solutions for the start, growth and internationalisation of enterprises and for exports /2013 Finnvera plc Telephone service Switchboard

1500 02/2013 Finnvera plc Telephone service +358 29 460

Cruise Finance Simon Hartley Partner Norton Rose Fulbright LLP 19 May 2015

Cruise Finance Simon Hartley Partner Norton Rose Fulbright LLP 19 May 2015 Cruise Financing Introduction Background to our involvement (i.e. shipping focus of firm but particular involvement with cruise