(UKEF, London, 25 June 2024) UK Export Finance (UKEF) adopted the Equator Principles (EPs) on 31 March 2016, joining what now comprises 128 other banks and Export Credit Agencies (EP Financial Institutions or EPFIs) in applying this global guidance for environmental, social, and human rights (ESHR) risk management when financing projects. During the reporting period 1 April 2023 to 31 December 2023, UKEF contributed to the planning and management of the mid-year workshop and celebration event that was held in London to mark 20 years of the Equator Principles. UKEF continues to follow the OECD Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (OECD Common Approaches), currently dated 25 March 2024, which applies alongside the Equator Principles as outlined in the Policy and Practice on Environmental, Social and Human Rights due diligence and monitoring (ESHR Policy). The report lists projects supported within the scope of the Equator Principles and provides links to documents on social impacts, social risks, project-related human rights and sustainability.
Newsletter
U.S. EXIM Bank in an Age of Great Power Competition
(Center for Strategic and International Studies, Washington, 18 June 2024) The U.S. Export-Import Bank (EXIM), the United States’ official export credit agency (ECA), is an independent, executive branch institution that supports U.S. businesses by financing the exports of goods and services. EXIM creates jobs at home and has been an important national security instrument. From 2015 to 2019 the bank was dormant due to the absence of a board quorum and the lack of a reauthorization of its charter from the U.S. Congress. During the last 15 years, EXIM, once the global ECA gold standard, has been underutilized as it has struggled politically. Over this same period the global export credit landscape has evolved significantly, with governments around the globe using their ECAs more as instruments of industrial policy and to strategically boost their manufacturing competitiveness and strategic influence in critical emerging and frontier markets. Most notable in its ascendance as a global export credit player, the People’s Republic of China (PRC) has become a much bigger player in the space. At the same time, U.S. allies (and sometimes economic competitors) have also elevated their ECAs’ competitiveness and influence by offering more flexible terms and becoming more client-oriented compared to EXIM. As a result, EXIM not only has lost its global leadership position, but now is at a significant competitive disadvantage compared to its competitors, including the PRC, in the ECA space. The U.S. EXIM bank will need a new slate of board members in January 2025, as three of the four current board members’ terms end January 20, 2025, and EXIM faces a reauthorization in 2026, offering an opportunity to rethink what tools and capabilities EXIM should have.
JBIC fires up US$1bn loan for Australian LNG project
(Global Trade Review, London, 4 June 2024) Perth-headquartered Woodside Energy has secured a US$1.45bn loan package from Japan’s export credit agency and a group of private lenders, backing an LNG development off the Australian coast. As part of the deal, the Japan Bank for International Cooperation (JBIC) is providing a US$1bn loan that Woodside will use for its Scarborough Energy Project, which is slated to start delivering LNG by 2026. The facility will ensure a long-term and stable supply of LNG for Japan, says JBIC in a statement.
SACE LAUNCHES US$1.3 BILLION INVESTMENT PACKAGE FOR VIETNAM
(ICE, Vietnam, 9 May 2024) Italian ECA SACE has unveiled a US$1.3 billion aid package aimed at supporting Italian businesses in Vietnam. Vietnam, one of the fastest-growing economies in Southeast Asia, has become a focal point for Italian companies seeking investment opportunities, said a SACE representative.“With a capital support plan of up to US$1.3 billion, Italian businesses as well as Vietnam will have easier access to technology and supplies from Italy to promote investment and development,” said Michal Ron, head of International Business at SACE, at a press conference on May 7.The funding will prioritize sectors such as renewable energy, manufacturing, and agriculture.
UK Export Finance unveils ambitious new target for SME support
(Global Trade Review, London, 1 May 2024) UK Export Finance (UKEF) has vowed to support 1,000 SMEs per year before the end of the decade, a big jump on current levels. The export credit agency (ECA) unveiled the target in its 2024-29 business plan this week. The plan also includes pledges to enable £12.5bn of export contracts and provide £10bn of “clean growth” financing by 2029. UKEF’s support for SMEs is closely scrutinised by UK lawmakers, because small businesses tend to find it harder to secure trade and export finance, compared to their larger peers. A handful of large companies, such as Rolls-Royce and BAE Systems, have previously scooped up the largest share of UKEF’s financial support by value. While the number of SMEs benefiting from UKEF’s backing is already high as a proportion of the agency’s overall customers, it still falls far short of the target of 1,000. Around 210 of the 251 customers UKEF supported in the 2023-24 financial year were SMEs. UKEF says it plans to boost its assistance to SMEs partly by on-boarding non-bank financial institutions that specialise in small business finance. A source at UKEF says such financial institutions would likely provide financing backed by a UKEF general export facility guarantee and need to have prior experience with trade finance. UK Export Finance (UKEF) typically charges premium rates of 6% to 7%, higher than other European ECAs according to an annual benchmarking report from the British Exporters Association.
U.S. EXIM Funding Fossil Fuels Abroad
(Living on Earth, Lee NH, 3 May 2024) Despite an international agreement to phase out financing for fossil fuel projects abroad, the Biden administration recently approved a $500 million dollar loan guarantee for an oil and gas drilling project in Bahrain. The Biden-Harris administration is coming under fire for failing to keep its promise to stop funding international fossil fuel projects. One of those critics is Nina Pušić, senior climate finance analyst with the advocacy group Oil Change International. At the U.N. Climate Conference in 2021, which was called COP26 in Glasgow, 39 governments and public finance institutions signed on to this initiative called the Clean Energy Transition partnership, also known as the Glasgow Statement. They promised that within one year they would stop new direct financial support to fossil fuel projects within the year. It was the Biden administration who signed on. So even though the Biden administration has promised that U.S. government agencies would stop funding fossil fuels, U.S. EXIM and DFC have decided that they’re going to continue doing that regardless. And it wasn’t just at the U.N. Climate Conference in 2021 where the Biden administration signed on to this, but it was also at the G7 in 2022. So it’s not only one but actually two international commitments that this administration made.
Bumper year for trade credit insurance, but claims rising
(Global Trade Review, London, 29 April 2024) Export credit agencies and commercial trade credit insurers have celebrated an “exceptional” year for some key product lines, but are also experiencing a sharp rise in claims from customers, newly released data shows. New short-term trade credit insurance business rose 6% year-on-year to US$2.8tn in 2023, while medium and long-term (MLT) business shot up by 40% to US$165.4bn, according to a snapshot of full-year 2023 data released by the Berne Union on April 25.
Vietnam’s says HSBC to arrange funds for $1.49 bln refinery project
(Tank Terminals, Hong Kong, 17 May 2024) Binh Son Refining and Petrochemical JSC (BSR), a subsidiary of state-owned Petrovietnam and operator of the Dung Quat oil refinery, has selected HSBC to coordinate an export credit agency (ECA) arrangement for a $1.49 billion expansion. In March, BSR had said it would spend VND36,397 billion ($1.49 billion) on expanding the refinery, increasing its capacity by 16% to 171,000 barrels per day or 7.6 million tons a year. The expansion also aimed to make products meet Euro V emission standards and other environmental requirements, while improving the facility’s flexibility to refine different kinds of crude oil. BSR aims to put the plant into operation in 2028 after 37 months of construction.
Etihad Credit Insurance records 21-fold growth
(24-7 Press Release, Seattle, 23 May 2024) Etihad Credit Insurance (ECI), the UAE Federal export credit company, unveiled its growth trajectory in its annual report for 2023. With a gross exposure of AED 9.6 billion (US$2.61 billion), ECI experienced a 21-fold increase compared to 2019. ECI’s supported UAE exporters across 17 sectors in 110 countries, amounting to a non-oil trade and investment of AED 14 billion in 2023. This was facilitated by 21 agreements with government export credit agencies.
HKECIC signs Guangdong pact with Sinosure
(The Standard, Hong Kong, 23 May 2024) The Hong Kong Export Credit Insurance Corporation signed a pact with the Guangdong Branch of China Export & Credit Insurance Corporation, Sinosure, yesterday to strengthen cooperation on export credit insurance services for businesses across Guangdong and Hong Kong.
