(Reuters, Washington, 30 August 2022) The head of the EXIM and a senior Ukrainian development minister have pledged to keep working on U.S. financing opportunities to support Ukraine’s energy security and infrastructure, the export credit agency said. The meeting between EXIM Chair Reta Jo Lewis and Ukrainian Minister for Communities and Territories Development Oleksiy Chernyshov came exactly a year after EXIM and Ukraine signed a memorandum of understanding to identify $3 billion in EXIM-supported export financing projects for Ukraine, including road, rail and energy infrastructure. In March, less than a month after Russia’s invasion started, EXIM and its fellow export credit agencies in Britain and Canada withdrew all new export credit support for Russia and Belarus.
Newsletter
The role of ECAs in financing the transition to net zero
(Global Policy Journal, Durham, 23 September 2022) There is no net-zero world without a sustainable trading system, and trade finance is estimated to contribute to between 80–90% of all world trade. The first steps toward green ECAs have been taken, with the agreement announced at COP26 to end export credit support of unabated coal-fired power plants and the first net zero commitments to be made by [some] leading ECAs. In the coming months, there is an opportunity for the broader ECA community to step into the net zero-fold and work with private finance, policy makers, scientists, and civil society to accelerate an orderly and just transition to a net zero global economy. Our world depends on it. [Read the full 6 page report here. However, climate scientists warned in 2021 that the concept of net zero is a dangerous trap, noting that “Net zero” is the point at which any residual emissions of greenhouse gases are balanced by technologies removing them from the atmosphere. This is a great idea, in principle. Unfortunately, in practice it helps perpetuate a belief in technological salvation and diminishes the sense of urgency surrounding the need to curb emissions now.]
Iranian & Russian ECAs ink agreement to facilitate trade
(Tehran Times, Tehran, 10 September 2022) The Export Guarantee Fund of Iran (EGFI) has signed an agreement with the Russian Agency for Export Credit and Investment Insurance (EXIAR) with the aim of facilitating exports and providing the necessary guarantees for the development of trade between the two countries. According to Peyman-Pak of Iran’s Trade Promotion Organization,, the agreement is signed with the aim of helping the traders of the two countries to use export insurance as an alternative to letters of credit (LC) and to reduce the risk of trade between the two countries. Emphasizing that the agreement has no credit limit and the signatories can issue guarantees up to one billion dollars, Peyman-Pak said: “This achievement has been made in line with the efforts of Trade Promotion Organization and Export Guarantee Fund of Iran to facilitate trade between the two countries of Iran and Russia.” It is not know if this agreement could include cover for Iran’s alledged sale of military drones to Russia.
Berne Union report warns of dwindling risk appetite over Ukraine related claims
(Global Trade Review, London, 31 August 2022) Rising geopolitical risk is driving up demand for export credit insurance, says a new Berne Union study, which warns that the market is bracing for a wave of Ukraine-related claims. According to the association’s latest ‘Business Confidence Index’ report, providers of short, as well as medium and long-term credit and political risk insurance, have seen “strong” levels of demand this year. The quarterly analysis, based on a survey of the Berne Union’s more than 80 members – including export credit agencies, private credit insurers and multilateral financial institutions – reveals that requests for short-term cover have been especially robust. “Payment delays directly caused by the war are materialising for some insurers and there is a general expectation that liquidity constraints and higher interest rates will lead to increasing insolvencies in the third quarter,” the report says. In a world where roughly 15% of trade is protected by insurance, eyes are often on the trade credit insurance stage.
Sweden restricts ECA fossil fuel finance to deliver on climate commitment
(Oil Change International, Washington, 20 September 2022) At the COP26 United Nations Climate Conference in Glasgow, 39 countries and institutions signed up to the Glasgow Statement, committing themselves to ending “new direct public support for the international unabated fossil fuel energy sector by the end of 2022, except in limited and clearly defined circumstances that are consistent with a 1.5°C warming limit and the goals of the Paris Agreement.” The initiative has the potential to shift $39 billion a year out of fossil fuel projects and into clean energy if countries keep their promises. As the deadline for implementing the Statement looms, the Swedish export credit agencies, SEK and EKN, have released an updated policy. A previously-released policy aligned Swedfund – the Swedish development finance institution – with the Glasgow Statement.
France restricts oil & gas finance to meet climate commitments, piling pressure on Germany, USA, Canada to follow suit
(Oil Change International, Washington, 26 September 2022) the French Government has published a new policy that restricts public finance for fossil fuels from the French export credit agency, BPIFrance. This policy is meant to implement France’s commitment to end international public finance for fossil fuels by the end of 2022, which it made at the UN Climate Conference in Glasgow last year along with 38 other countries and financial institutions (The Glasgow Statement). The French Development Agency (AFD), which is also subject to the Glasgow commitment, had already adopted a near-complete fossil fuel exclusion in 2019. The policy – which will be enacted in law through the French Government’s budget – is a landmark win for French campaigners who have been calling for an end to French export finance for fossil fuel projects for years. In addition, it builds pressure on fellow Glasgow Statement signatories to keep their promise and announce their Glasgow-compliant policies by the upcoming COP27 UN Climate Conference in Egypt. So far, the United Kingdom, Denmark, Belgium, Sweden and now France have published policies to implement their Glasgow commitment. The new policy implements a commitment made at last year’s UN Climate Conference to end almost all French government-backed financing for international fossil fuel projects, responsible for €9.3bn in public finance for oil and gas between 2009 and 2019.
Berne Union releases latest Business Confidence Survey
(Trade Finance Global, London, 26 August 2022) The Berne Union released its latest Business Confidence Survey this week amid mounting geopolitical uncertainty. This latest rendition of the quarterly report shows that demand for export credit insurance is growing. This phenomenon appears to stem from heightened geopolitical risk around the world and the overall bleak economic outlook. Paul Heaney, Acting Secretary General at Berne Union, said, “Right now, geopolitical risk is pushing up demand, while the fragile economic environment ultimately means more expensive finance and less underlying trade and investment activity.”
Equator Principles Association Issues Due Diligence Guidance Note
(JD Supra, Sausalito, 23 August 2022) In July 2022, the Equator Principles Association published a Guidance Note on how to apply the latest iteration of the Equator Principles (EP), EP4, during the Environmental and Social Due Diligence (ESDD) process. The Guidance Note is significant because it addresses the changes to the pre-financial close ESDD required to be undertaken by Independent Environmental and Social Consultants (IESCs) under EP4, including with respect to projects located in Designated Countries that are no longer “deemed in compliance” with the Equator Principles solely by virtue of satisfying host country law. The E&S standards applied by export credit agencies (ECAs) and development finance institutions (DFI) do not generally distinguish between Designated Countries and Non-Designated Countries. As such, if ECAs or DFIs are involved in the financing of a project, then the scope of the IESC’s ESDD should be the same regardless of whether the project is located in a Designated Country or a Non-Designated Country.
Korean battery maker secures $2B loan from 3 ECAS
(Reuters, Seoul 19 August 2022) South Korea’s SK On battery maker has raised about 2 trillion won ($1.51 billion) from private equity firms, pushing the electric vehicle (EV) battery maker’s valuation to around 20 trillion won as it works to expand production abroad, local media reported on Thursday. The battery unit of energy group SK Innovation Co Ltd (096770.KS) has been in talks with a local private equity consortium the Korea Economic Daily Newspaper said, citing unidentified investment banking sources. Last month, SK On secured a $2 billion loan from three export credit agencies to finance its factory in Hungary. In other news, Hyundai Mobis announced on Aug. 22 that Hyundai Motor Group (HMG) and LG Energy Solution have secured US$710 million to finance the construction of a battery cell joint venture plant in Indonesia. Hyundai Motor Co., Kia Corp., Hyundai Mobis and LG Energy Solution provided debt guarantees according to their stake, and the Korea Trade Insurance Corp., a state-run export credit institution, provided credit guarantees.
TNG receives AU$200M K-Sure conditional debt facility for Mt Peake mine
(Kalkine Media, Sidney, 9 August 2022) One of the leading Australian resource and mineral processing technology companies, TNG Limited (ASX:TNG) has secured a major cornerstone component of the multi-source, global funding package for its Mount Peake Vanadium-Titanium-Iron Project in the Northern Territory. In the latest development, TNG has received a conditional debt funding of AU$200 million (US$138 M) from the Korea Trade Insurance Corporation (K-Sure), which is the official export credit agency of South Korea under the Ministry of Trade, Industry and Energy. This debt funding is for TNG’s flagship Mount Peake Project, as per the terms of a conditional Letter of Support.
