All rights reserved. Copyright © 2008
Euler Hermes Kreditversicherungs-AG and
PricewaterhouseCoopers AG WPG.
Investment Energy Summit 2012, Athens
Export Credit and Investment Guarantees of the Federal Republic of Germany
Peter Ahlbrecht, Head of Project Finance Department
Investment Energy Summit Greece, Cyprus, Israel
Athens, March 28th-29th, 2012
page 2
Agenda
Export Credit and Investment
Guarantees
Basic Information
Export Credit Guarantees
Cover Policy and Portfolio Greece
Project Finance (PF) / Structured
Finance
Renewable PF transaction
Investment Guarantees
page 3
Mandatary business
Federal Export Credit and Investment Guarantees
on behalf of and for account of the Federal Republic of
Germany
cooperating as partners to a consortium
page 4
Basics
Export Credit Guarantees
(“Hermes Cover”)
Promotion of exports of mainly
German origin by securing
suppliers / banks against
economic and political risks
(buyers-/ country risks)
Investment Guarantees
Support of direct investments
of German companies by
covering political risks and by
offering investors long term
protection
page 5
Export Credit Guarantees
Promotion of German export as an objective of the
Federal Government‘s economic policy
Provide exporters access to difficult foreign markets
Support of foreign countries, in particular in difficult
phases of development and restructuring
Promotion of economic development abroad
Key element to raise funds for projects
Insurance against the risk of non-payment for
commercial and political reasons
page 6
Requirements for Export Credit Guarantees
Business that qualifies for official support
– Export transactions (goods/ services and financing
contracts) of a German exporters with goods of mainly
German origin involving non-marketable risks abroad
Criteria for the granting of cover are
– The concrete transaction/ project is eligible for support
– Commercial / political risks are justifiable
– Finance terms in accordance with common practice
– Provisions of the federal German budget law are observed
page 7
Interministerial Committee for Export Guarantees (IMA)
IMA
AA
Federal Foreign Office BMWi
Federal Ministry of
Economics and
Technology
(in charge)
BMF
Federal Ministry
of Finance
Experts
- KfW IPEX-Bank
- AKA Ausfuhrkredit-Gesellschaft
- Representatives of the export and
banking industry
Consortium Euler Hermes
PricewaterhouseCoopers
BMZ
Federal Ministry for
Economic
Cooperation and
Development
page 8
Decision-making procedure
Conditional
positive
decision
Positive
decision
Rejection
Exporter/Bank
Filing application
for an Export
Credit Guarantee
Mandataries
Examination of
application
Clarification of the
terms and
conditions /
Risk evaluation
Prepare
decision/sub-
mission to the
Interministerial
Committee
Interministerial
Committee
Unanimous
decision
Notification
that the
contracts
are
signed/the
securities
are in place
Firm
commitment
Issuance of
Policy and
invoice
page 9
Forms of single transaction cover
Supplier credit cover
Supplier credit cover for service providers
Buyer credit cover
Manufacturing risk cover
Constructional works cover
Airbus Guarantee
Project Finance
Ship Finance
Further forms of cover
Whole-turnover and revolving cover
Supplementary forms of cover
page 10
Cover Policy Greece
Export Credit Guarantees
Medium/Long-Term Business, i. e. risk periods of more than 2 years:
– No formal restrictions
– Credit periods of up to 8.5 years
– Longer credit periods possible for project finance (14 years), renewable energy projects (18 years) and power plants (12 years)
Collateral
– Case by case decision (not generally required)
Short-Term Business
– Not eligible due to EU regulations
Covered German exports to Greece
– EUR 87.7 million (2010/2011)
page 11
Sectors41,1
637,1
134,1
35,0
2,5
2,7 15,0
12,0
1,3
Wind Power Power plants Aircraft
Subway Printing machine Tubes
Industrial complex Machines Services
Current portfolio Hermes Cover
219,5
90,6
826,2
applied agreed in principle covered
in Euro m
page 12
Project Finance/ Structured Finance
Project Finance (PF):
Implementation of a Special
Purpose Company (SPC)
Project has to earn sufficient
revenues to cover operating
costs and debt service
Off balance sheet finance
structure
Structured Finance:
“Conventional” Export Credit transactions related to already existing borrowers with additional collaterals (e.g. assigned export revenues) and further project finance elements
page 13
Project Finance – Key Elements
Legally and commercially independent project company (SPV)
with the intention to provide a solid ring-fence against third-
party interventions
Economic viable project (= requirement of sufficient cash flows
to cover operating costs and debt service commitments) as
pre-condition for cover ensures that PF projects are favourable
for all involved parties (sponsors, lenders, ECAs)
No or limited recourse against project equity providers
Clearly defined / examined budget as part of the due diligence
process
page 14
Project Finance – Pros / Cons
Benefits from the sponsor‘s view
Higher predictability for investment
decisions
Higher certainty regarding ROI-
expectations
Pre-defined investment budget
Cleary structured contractual network
– Clear assignment of responsibilities
Narrowed investment and cost overrun
risks
Off-balance sheet structure
(establishment of a legally independent
project company („special purpose
company“)
Exploitation of new funding sources
Potential disadvantages / restrictions
Higher structuring costs (legal, financial)
Only suitable for larger projects (> EUR 25 m)
Loss of autonomy regarding commercial
decisions
Limited access towards project assets pledge in
favor to the lenders
+ -
page 15
Project Finance – Reference Case
Concentrating Solar Power (CSP)
30 MW Plant in Puerto Errado, Spain
First commercially operated CSP plant using Fresnel
Technique
Expected annual production: 50 GWh
Engineering, Procurement and Construction contract
with the German Exporter Novatec Solar
Investment: appr. EUR 70 m
Limited recourse structure
Long-term PPA with a fixed tariff structure
page 16
Excurse: Investment Guarantee Scheme
►Purpose of the scheme:
– The Federal German Government supports direct investments of German
companies abroad by covering political risks and by offering investors long-term
protection
►Criteria for cover:
– German investment
– Eligibility for promotion
– Sufficient legal protection (mainly by bilateral investment treaties between
Germany and the host country)
►Figures in 2011:
– Overall exposure: EUR 31.1 bn (Statutory maximum exposure limit: EUR 50 bn)
– New cover (worldwide) for investments in 2011: EUR 5.2 bn
– Cover in principle possible / however, no Greece portfolio at present
page 17
Thank you for your attention!
Further information is provided under:
Export Credit Guarantees:
Hotline: +49 (0) 40/88 34-90 00
Investment Guarantees:
Hotline: +49 (0)40 / 88 34 - 94 51
www.agaportal.de
Peter Ahlbrecht
Euler Hermes Kreditversicherungs-AG
Tel.: +49 (0)40 / 8834 - 9572
E-Mail:[email protected]
Your questions please!