The Netherlands Ministry of Finance announced today (July 3, 2006) its first agreement for a swap of its exposure on Indonesia. A risk of € 50 million of Atradius-DSB on Indonesia is to be exchanged for the same amount of risk of the Danish EKF on Vietnam. The swap is effective as of 1 July 2006.
The Netherlands has a ceiling for Atradius-DSB’s exposure on Indonesia of € 1,5 billion. This amount was exceeded some time ago, mainly because of insurance for the supply of 4 brand-new military navy vessels (a small type of frigate) built in the Netherlands for a total value of € 1 billion. Because of this, it has been impossible for quite a while to insure other Dutch exports to Indonesia.
According to the Ministry of Finance, this specific exposure swap allows the Dutch company ‘Damen Shipyards’ to sell buoy mooring ships, ordered by the government of Indonesia. According to the Dutch press release, managing director Lars Kolte of EKF welcomes this obligo swap as a good opportunity to also fully utilise insurance possibilities of Danish exporters. He apparently hopes for a new market for exposure swaps within the Berne Union, which would help create new space for exporters from the countries of member ECAs.
The letter of the Dutch Minister of Finance to Parliament announcing this swap, also reads that part of the Vietnam risk taken on from Denmark (value € 25 million) may be exchanged once more against a Danish risk on Jamaica (value € 20 million). This gives an indication of how nominal risk is turned into a lower paper risk in such deals.