ECAs scramble to respond to the financial crisis and to protect national exporters

Dec. 3 (alibaba.com) Credit risks rise for US-bound Brazilian trade. The US market used to be a safe haven for Brazilian exporters, but with the U.S. economy on the brink, their once reliable northern clients have suddenly become a major, costly source of credit risk. Big multinational trade finance insurers [e.g. Coface & Euler Hermes] have raised premiums by at least 10% over the last two months. Their operations are losing money in the U.S. and Europe as claims increase. For many trade finance insurers, the U.S. now ranks with Argentina and Ecuador for risky business.

Dec. 3 (Business Standard) India’s auto component makers not only face slower growth in the domestic market, the Export Credit Guarantee Corporation of India (ECGC) is now refusing credit insurance to over 50 auto component companies that sell to the Big Three car makers in Detroit.

Dec. 1 (eGovMonitor) Pascal Lamy, in Doha on 29 November 2008, said “Aid for Trade is important but the big prize lies in the success of the Doha Development Round”... Roughly 90% of international trade is financed with short-term credit and any drying up of this financing channel will have a serious impact on developing countries. The WTO recently hosted regional and financial institutions, together with ECAs, to address this problem. And we are starting to see responses, including the recent World Bank announcement of the tripling of the ceiling for its trade finance guarantees, action by the OECD and by ECAs.

Nov. 25 (ExIm) The Export-Import Bank of the United States today enhanced several of its trade finance products to help counter the tightening of credit and the lack of liquidity in the export marketplace and help U.S. exporters, and in particular small-businesses, create and maintain export-related jobs.

Nov. 25 (Dow Jones) The U.K. government will move to ease access to credit for small and medium-sized enterprises by launching a temporary GBP1 billion finance scheme, the Chancellor of the Exchequer Alistair Darling announced Monday...Darling also announced an additional temporary GBP1 billion support for SMEs through the Export Credit Guarantee Department, which helps U.K. companies compete in overseas markets.

Nov. 23 (AP) -- The Norwegian government Sunday said it will put aside an additional 50 billion kroner ($7 billion) for the state export credit agency to ease the effect of the global credit crunch on businesses.

Nov. 18 (Bloomberg) -- Finland will provide loans to exporters struggling to gain financing after banks curtailed lending as global turmoil showed the first signs of hurting the Nordic nation's economy. The government set aside 1.2 billion euros ($1.5 billion) for Suomen Vientiluotto Oy, a government-owned export credit provider.

Nov. 17 (Dow Jones)--Brazil's central bank will hold an auction of export credit lines worth up to $1.5 billion Tuesday, it said in a statement Monday.

Nov. 17 (Financial Mail) -- The UK Government is considering 'renationalising' export credit insurance to ensure small and medium-sized export firms are protected against bad debt in tough times. At present, the Government's Export Credits Guarantee Department insures overseas business contracts between five and 12 years long. But since 1991 insurance for cash and short-term contracts - those less than two years - has been provided by the private sector. However, as the global economy worsens, major [private] credit insurers, including Atradius, have been reducing or pulling cover for firms across different markets and countries.

Nov. 12 (WTO) The Berne Union, which groups private and public export credit agencies, has informed the WTO that export credit agencies have collectively increased their business by more than 30 percent in the last twelve months. They note confirmation that this increase in activity is being backed by some national governments, for example Germany, Japan and Hong Kong, China.

Oct. 31 (Berne Union) At the 13-17 October 2008 Annual General Meeting of the Berne Union - the world’s leading association of export credit and investment insurers - in Banff, Alberta, Canada, discussions were dominated by the industry’s response to the global credit crisis... In 2007, Berne Union members covered over 10% of global cross-border trade. From $1.3 trillion at year end, these levels continued growing during the first half of 2008... As Berne Union Secretary-General, Kimberly Wiehl explained, “Our coordinated response is important in supporting the global economy but so too is our work with other international financial institutions. OECD and IMF representatives have, once again, taken part in our annual meeting and we will join the WTO and key private and public bankers to discuss the impact of the credit crunch on trade finance."