(Global Trade Review, London, 13 December 2021) [Barclays sponsored GTR article] Having been profoundly shaken by the combined impact of the pandemic and Brexit, UK exporters continue to face significant trade challenges. As companies rethink and recalibrate their export strategies and supply chains, there is an increased focus on ESG performance and an opportunity to build back not only better, but cleaner and greener. In mid-November, GTR and Barclays gathered top trade experts for a virtual roundtable discussion to address the crucial issues impacting the export and export finance market, the route to export recovery and growth in a more sustainable environment, and the role of the financial sector in keeping trade flowing.
ECAWatch Newsletter 12
Facing debt repayment issues China shifts Africa financing focus from infrastructure to trade
(Global Trade Review, London, 15 December 2021) China’s commitments to financing in Africa are shifting away from giant infrastructure developments and towards developing stronger trade flows and commercial investments, analysts say. At the Forum on China-Africa Cooperation (Focac) in late November, the country unveiled an action plan that included around US$40bn of commitments in the form of trade finance, commercial investments and a share of China’s Special Drawing Rights (SDR). Although a hefty headline figure, it is significantly less than the US$60bn promised at the two most recent forums in 2015 and 2018. It also includes little in the way of concessional loans, which has been China’s primary tool for financing a swathe of infrastructure across the continent, including railways, airports, roads and energy projects. GTR reported in September that European export credit agencies and commercial lenders have been approached by Chinese contractors working on projects in Africa who have been unable to secure financing from Chinese sources. The Atlantic Monthly calls this “China’s real ‘debt trap’ threat, claiming it “is part of a deepening debt crisis affecting countries that have borrowed hundreds of billions of dollars from China for infrastructure development… It’s not just low-income countries that are hard-pressed to repay China. Middle-income nations also are seeking to renegotiate their Chinese debts as the pandemic-induced global economic slowdown nears the two-year mark. But Chinese lenders are digging in their heels as governments ask for relief, especially with countries that don’t receive media attention. And those countries are feeling the pain. For example, Suriname’s inability to access IMF funds means less money for social programs at a time when the pandemic has increased demand for health care and other programs focused on the poor.
ESA adopts revised state ECA/corporate aid guidelines
(ECA Watch, Ottawa, 31 December 2021) The EFTA Surveillance Authority (ESA) which monitors non-EU European Free Trade Association States (Iceland, Liechtenstein and Norway) has adopted two sets of revised guidelines in the field of state aid: one on the promotion of risk finance investments and another on short-term export credit insurance. Both guidelines correspond to guidelines adopted by the European Commission and aim to ensure [the fiction of] a level playing field for businesses across the EEA. State aid for export credits monitored by the EU [and the OECD] enable foreign buyers of goods and services to defer payment. This entails a credit risk for sellers, for which they can insure themselves. This is known as export credit insurance. The guidelines will [supposedly] help ensure that state aid does not distort competition in the EEA among private and public – or publicly supported – export credit insurers, and create a level playing field among exporters.
EXIM supports Lithuania in political dispute with China
(Epoch Times, Washington, 22 December 2021) Lithuania’s regional and economic stability is facing challenges from the Chinese regime for allowing self-ruled Taiwan, which Beijing claims as a runaway province, to open a de facto embassy in its capital Vilnius. In response, China recalled its ambassador in August before downgrading the diplomatic relations and expelled Lithuania’s top representative to China in November. Beijing has imposed a trade embargo over Lithuanian exports and imports, and has threatened multinationals to sever ties with Lithuania or face being shut out of the Chinese market. Chinese customs authorities have refused to import or clear goods from the Baltic nation. The US is supporting Lithuania in this dispute. [It is interesting to note that it was the right-wing Falun Gong owned Epoch Times which flagged the EXIM approval of a $600 million export credit agreement with Lithuania on Nov. 24, in a bid to boost economic cooperation between the two nations and withstand increased pressure from the Chinese regime.]
EKF issues ‘biggest ever’ loan for Turkey railway project
(Global Trade Review, London, 8 December 2021) Danish export credit agency EKF has signed its largest ever export loan for the construction of a high-speed railway project in Turkey. The agency is lending €576mn to the Turkish finance ministry for the project. The loan is classified as green because the electric railway is categorised as sustainable under the EU’s sustainable financing taxonomy. The total value of the financing is €1.1bn, which includes contributions from Swedish public finance and export credit bodies EKN and SEK. Standard Chartered and several other commercial lenders are also involved in the deal, but their exact roles have not yet been disclosed.
Korean ECA to Extend $375 Mil. to Daewoo E&C’s LNG Plant Project in Nigeria
(Business Korea, Seoul, 23 December 2019) The Korea Export-Import Bank announced on Dec. 22 that it will provide US$375 million in loans to Daewoo Engineering & Construction’s LNG plant project in Nigeria. For the first time as a Korean company, Daewoo E&C won the LNG plant as a prime contractor in September. It will carry out the project on an engineering, procurement and construction (EPC) basis. The LNG plant market had been dominated by five or six builders from developed countries including the United States, Japan, and Italy. The project involves building an LNG plant with an annual production capacity of 7.6 million tons and additional facilities for the plant on Bonny Island of southern Nigeria. When the plant is completed, the nation’s LNG production will soar from 22 million tons to 30 million tons annually. Apart from the Korea Export-Import Bank, the Korea Trade Insurance Corp. is considering extending a loan of a similar size. Korean export credit agencies (ECAs) are expected to provide around US$750 million to the project. This project is also the first to be supported through a special account set up by the Korean government to help Korean companies land more overseas orders.
Gaslog LNG carrier announces $1.05 billion ECA backed debt
(Hellenic Shipping News, Cyprus, 17 December 2019) LNG carrier GasLog Ltd. announced that it has signed an Export Credit Agency-backed debt financing of $1.05 billion with twelve international banks for its current newbuilding programme (the “Newbuild Facility”). The Newbuild Facility covers the balance due to the shipyard on delivery and consequently the final instalments of the seven newbuildings are fully funded. Five of these seven newbuildings are scheduled to deliver from the yards into firm multi-year charters in 2020 and the remaining two into firm multi-year charters in 2021. GasLog’s owned fleet consists of 32 vessels, with 25 liquefied natural gas carriers on the water and seven LNG carriers on order. This includes 13 LNG carriers in operation that are owned by its New York-listed unit GasLog Partners.The deal is backed by the Export Import Bank of Korea (“KEXIM”) and the Korea Trade Insurance Corporation (“K-Sure”), who are either directly lending or providing cover for over 60% of the facility. Gaslog’s latest tanker acquisition was recently launched at the South Korean Samsung Heavy Industries shipyard.
UAE, Egypt to strengthen trade relations via ECA MoU
(Gulf Today, Dubai, 16 December 2019) UAE and Egypt have agreed to strengthen trade relations and boost bilateral exports between the two countries through a Memorandum of Understanding (MoU) signed between Etihad Credit Insurance (ECI), the UAE Federal Export Credit company and the Export Credit Guarantee Company of Egypt (ECGE). UAE-Egypt non-oil trade in 2018 amounted to Dhs20.1 billion (US$5.44 B), a 14.6 per cent growth compared to Dhs17.6 billion (US$4.8 B) in 2017 indicating a strong overall strategic partnership between the two countries, according to data released by the UAE Ministry of Economy. Furthermore, the UAE ranks first globally in terms of investments in Egypt with total FDI amounting to Dhs24.3 billion (US$6.6 B) reflecting the activity of 990 Emirati companies that invested in Egypt at the end of 2018. Egypt, on the other hand, ranks 28th globally in terms of investing in the UAE with total FDI valued at Dhs3.3 billion (US$899 M) during the same period.
Chubb takes stake in ATI to boost African trade
(Global Trade Review, London, 11 December 2019) Global insurer Chubb has made a US$10mn equity investment in the African Trade Insurance Agency (ATI), becoming the first global property and casualty insurer to invest in the multilateral political risk and credit insurance agency. ATI supports trade and investment in African member state nations by offering complete risk solutions, including credit insurance and political risk products. It currently has 16 African nations and 10 institutional members as shareholders, and claims to support trade and investment in the countries it represents equivalent to between 1 and 2% of their GDP.
Central Bank of Egypt launches ECA
(Global Trade Review, London, 11 December 2019) The Central Bank of Egypt (CBE) has signed off on a new US$600mn export credit risk company in a bid to bolster Egypt’s intra-Africa trade links. The new company, which will be based out of Cairo, will seek to help Egyptian companies win contracts for major projects with African governments, which the African Export-Import Bank (Afreximbank) claims are [could be?] worth US$60bn annually. Trade between Egypt and other African countries is only around 2% of total Egyptian exports.
