(Arab News, Jeddah, 18 November 2021) The Abu Dhabi National Oil Company (ADNOC) signed a $3 billion loan agreement with Japan’s export credit agency and four other lenders, Reuters reported citing JBIC. The Japan Bank for International Cooperation (JBIC) is providing $2.1 billion and Sumitomo Mitsui Banking Corporation (SMBC), the Tokyo branch of HSBC, Mizuho and MUFG are providing the rest, JBIC said in the statement. “This facility is intended to provide necessary support to ADNOC in ensuring stable imports of crude oil by Japanese companies,” JBIC said.
Newsletter
US EXIM focus on Africa
(JD Supra, Sausalito, 15 November 2021) Africa is a priority for Biden administration agencies the International Development Finance Corporation and EXIM. As of the end of 2020, DFC had invested approximately US$8 billion (approximately 25 percent of its total portfolio) across more than 300 projects on the continent. During 2009 – 2019, EXIM supported US$12.4 billion of transactions to sub-Saharan Africa,11 and the region is home to EXIM’s largest commitment to date. Moreover, EXIM is a long-time player in Africa, with experience dating back to the 1940s. The agency is currently open for business in 44 of the 49 countries across sub-Saharan Africa. In March 2020, it approved a US$91.5 million transaction for electrification in Senegal.12 Two months later, the agency approved its largest transaction to date: a US$4.7 billion credit (direct loan) supporting exports of US goods and services with more than 60 US suppliers to assist the development and construction of an integrated liquefied natural gas project on the Afungi Peninsula in northern Mozambique.13 EXIM made its commitment alongside those from almost 20 other ECAs and DFIs, which offered an aggregate of US$16 billion in loans.
U.K. to Set 1 Trillion Pound Post-Brexit Export Target
(Bloomberg, London, 14 November 2021) The U.K. will announce a new export target this week of 1 trillion pounds ($1.3 trillion) per year by 2030 as part of Prime Minister Boris Johnson’s move to overhaul its export strategy to show the benefits of leaving the European Union. A new “made in U.K., sold to the world” campaign will also be launched, as well as initiatives to boost overseas trade by providing export-linked loans and access to expertise and advice, the newspaper said. U.K. Export Finance, the government’s export credit agency, will be allowed to back larger loans for foreign or domestic companies that want to start shipping from the U.K., the Financial Times said, in a bid to attract foreign investment to the country. Previous Conservative governments in the U.K. failed to achieve the same export target by 2020, and the country only increased overseas sales to 689 billion pounds by 2019 before the pandemic hit.
Russian ECA Helps Bangladesh enter nuclear power age
(Eurasia Review, Albany, 13 November 2021) Bangladesh initiated its nuclear program in 2013 by signing a treaty with Russia that opened up a new avenue in their bilateral cooperation. At that time, the two countries signed a state export credit agreement to implement a nuclear project in Bangladesh. The work on the Rooppur plant started with the direct financial and technical cooperation of Russia. There are garment factories in Bangladesh which are producing in huge quantities. So, Bangladesh needs electricity. In 2009 the power generation was 3200 MW; now it has exceeded 20,000 MW. Two 1200-MW capacity reactors are being set up at Rooppur. Once the first nuclear power plant in Bangladesh begins production, it will kick-start another developmental revolution in the country.
International Chamber of Commerce proposes new framework for sustainable trade finance
(Reuters, London, 10 November 2021) The standard setter for global trade finance flows has proposed a new set of rules to define sustainability in the trade finance arena, worth some $5 trillion a year, an executive told Reuters. While governments and business sectors move quickly to set guidelines for some types of sustainable finance, there are no standards for trade finance. Those rules would apply to a third of global trade. Agreeing on a common rulebook could help direct more trade flows toward efforts that reduce climate-warming emissions and that also meet the United Nations’ development goals, said Andrew Wilson, policy director at the International Chamber of Commerce (ICC).
Russians Discuss Increased Engagement With Africa
(Eurasia Review, Albany, 10 November 2021) Russia’s weak economic presence in Africa has become a thing of concern for some experts in the country and they wonder why the nation is not aggressive with this like its ally, China. Smaller countries such as Turkey is visibly broadening its economic influence and so are a number of Gulf States. In July 2021, participants at the Association of Economic Cooperation with African States (AECAS), established under the aegis of the Secretariat of the Russia-Africa Partnership Forum (RAPF), agreed that lack of financial support was the major reason for this. The forum, which had in attendance some leading Russian companies and banks, discussed an effective system of financing projects and supporting investment in Africa. Nikita Gusakov, Head of the Russian Export Credit and Investment Insurance Agency (EXIAR), reiterated that Africa was a priority for the agency, outlining a number of deals that EXIAR has been involved in on the continent.
New OECD down payment requirements set to boost ECA support in emerging markets
(Global Trade Review, London, 10 November 2021) The OECD has relaxed down payment rules for transactions involving export credit agencies (ECAs) in emerging markets, in the wake of what it calls a “market failure” in the private sector. Under the new rules, the OECD Arrangement on Officially Supported Export Credits has slashed the down payment requirement from 15% to 5% for sovereign borrowers in developing markets, so long as the transaction is guaranteed by a ministry of finance or central bank. The policy, which comes into immediate effect, thereby also increases the maximum amount participating ECAs can officially support from 85% to 95% of the total export contract value.
Norwegian ECA supports North Pole cruising in style
(AME Info, Dubai, 7 November 2021) A Swedish aviation company, OceanSky Cruises, announced that it will start cruises to the North Pole aboard luxury airships starting from 2024. The aviation industry made up 2.5% of the total CO2 emissions in 2018 alone, or double the amounts since the mid-1980s. Now, a Swedish aviation company, OceanSky Cruises, announced it will start cruises to the North Pole aboard luxury airships starting from 2024. Norwegian export credit agency Eksfin is playing a major role in accelerating the ‘green shift’ at sea, providing loan guarantees approaching €1 billion ($1.16 bn) for the construction of 35 eco-friendly vessels over the last four years, including ‘Le Commandant Charcot’.
British Airways secures another £1bn UKEF-backed facility
(CH-Aviation, Stansstad, 2 November 2021) British Airways has reached an agreement with UK Export Finance (UKEF) and a syndicate of banks for a five-year Export Development Guarantee committed Credit Facility (UKEF Facility) of GBP1.0 billion pounds (USD1.37 billion). According to parent firm IAG International Airlines Group, this is in addition to a GBP2.0 billion (USD2.74 billion) UKEF guaranteed facility that was announced in December 2020 and drawn in March 2021. IAG, which aside from British Airways also owns Iberia, Vueling Airlines, Aer Lingus, and LEVEL, said that as of the end of September, its total cash pile stood at a “strong” EUR10.6 billion euro (USD12.26 billion).
If global finance can step up to the net-zero challenge, governments surely can
(Guardian, London, 13 November 2021) A new alliance of financial institutions is committed to funding the changes necessary to avert climate catastrophe. Alliance Chair Mark Carney notes that six years ago, in Paris, countries reached an historic agreement to limit the global temperature rise to less than 2C, targeting 1.5C. “In finance, we launched the task force on climate-related financial disclosures so that companies would disclose their climate-related risks, allowing finance to measure what matters.” Despite these breakthroughs, in the years that followed, action didn’t match ambition. Few countries pursued the necessary policies, and business investment in decarbonisation was limited. Too many in finance thought that the climate crisis was someone else’s problem. People will no longer tolerate worthy statements followed by futile gestures. In April, we launched the Glasgow Financial Alliance for Net Zero (GFANZ), which now covers the entire waterfront of finance: banks, insurers, pension funds, export credit agencies and asset managers. It comprises more than 450 leading financial institutions from 45 countries. Its members have committed to managing their assets, which total more than $130tn, in line with achieving 1.5C. The total cost of the global transition is estimated to be about $4tn every year for the next three decades, so there are now more than enough readily available resources to do the job. While this is a watershed achievement, some are understandably sceptical. After all, if governments didn’t follow through after Paris, why would finance after Glasgow? [For example, in another news item, the Bureau of Investigative Journalism has reported that HSBC, on behalf of a group of 12 banks on Prince Charles’s Financial Services Taskforce, coordinated efforts to try and water down GFANZ action on climate change. The Bureau details that HSBC lobbied Mark Carney’s Net Zero Banking Alliance to: remove the list of sectors that must be included in the first round of target-setting; set targets only for sectors where there are “credible transition pathways” to a net-zero future and delay until 2025 or 2030 the deadline for banks to set targets for some carbon-intensive sectors, instead of 18 months from signing the NZBA commitment.]
