Would you like to serve more clients abroad and have less capital tied up in export credits? Our Buyer Credit Insurance Policy will enable you to do so.
The financing policy is an insurance product is designed to protect banks and financial institutions against the risk of default by foreign debtors. This product allows banks to provide financing to exporters with greater confidence because they are insured against both commercial and political risks.
This product is intended for both Dutch and foreign banks that provide financing to foreign buyers of Dutch goods and services. Banks located outside the OECD region are also eligible for insurance, provided they meet Atradius' reputation requirements.
Is the financing provided only after the export has already taken place? Then we speak of refinancing. We can also insure this with the Financing Policy within certain limits.
Our Financing Policy is intended for Dutch and foreign banks. Banks that are not based in an OECD country are eligible for insurance if they have been approved after a reputation check.
Covered risks
The Financing Policy covers default of principal, interest and late payment interest on export loans provided by banks. In certain cases, interest rate swap breakage costs are also covered. Losses are reimbursed if the borrower defaults due to the direct result of political or commercial causes (arising before or after delivery by the exporter).
Compensation occurs after the waiting period. This is usually 3 months from the time of default.
Assessment process
There are three forms of assessment for a Financing Policy:
- regular: the borrower is a government or an existing company. The processing of applications for regular transactions takes an average of 4 to 6 weeks. You provide the necessary (financial) information about the borrower. If this takes extra time, the processing also takes longer;
- project financing: the borrower is a special purpose company with limited or no guarantees from existing parties. See project finance;
- asset-based finance: the value of the capital asset to be financed provides good security for repayment of the financing. See Asset Based Finance.
The maximum size of the insured loan depends on, among other things:
- the (expected) creditworthiness of borrower;
- the financed portion of the contract amount. Based on OECD rules, this is usually a maximum of 85% (80% for ships);
- the space available under our country ceiling;
- the financial position of the exporter(s) involved.
Please contact us for a more precise indication of the maximum covered loan size for your transaction.
Deductible/ Insured’s Own Risk
Coverage for regular transactions is usually between 90 and 98% percent of the insured loan. You therefore have an excess of between 2 and 10%. This leaves you with a vested interest in the successful outcome of the loan. For project finance and asset-based finance, the percentage covered is usually lower.
Duration of the Loan and Repayment Schedules
The OECD has established rules determining the maximum amount, duration and repayment schedules for loans insured by public sector export credit insurers such as Atradius Dutch State Business. In addition to general rules, there are also specific rules for certain sectors (such as shipbuilding and sustainable energy) and for project finance. Please contact us for further information on the repayment terms applicable to your particular transaction.
Loans in Foreign Currency
Cover of a loan in currencies other than the euro is possible. For stable, hard currencies (such as the US dollar, British pound or Japanese yen), the premium and any indemnity will be denominated in the relevant currency. We can also underwrite loans in other currencies in many cases. The premium and any indemnity will then be in the equivalent value in euros. However, with cover in foreign currency there is a maximum exchange rate at which we pay out claims. This is generally very generous. The majority of your exchange rate risk is thus covered.
Documentation
Atradius does not take documentation risk. This means that we do not view the loan and collateral documents. Through the application form, you notify us of the main features of the loan. In the policy, we include any items we require you to include in the loan documentation. With project financing, we do get closely involved in negotiating the term sheet. But even in this case, we leave the documentation to the bank.
Premium
How much does it cost?
The amount of the premium is fixed at the beginning of the transaction. It depends, among other things, on the contract amount, the country of export and your customer's rating.
