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Helping New Zealand’s exporters exploit trade opportunities. Trade Finance Tools for Exporters Tim Robertson 04 917 6080. 19 th February 2009 – Rotorua Exporters. ABOUT NZECO. New Zealand’s Export Credit Agency Goal - to assist NZ firms win and finance export trade

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Trade Finance Tools for Exporters Tim Robertson 04 917 6080


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    1. Helping New Zealand’s exporters exploit trade opportunities. Trade Finance Tools for Exporters Tim Robertson 04 917 6080 19th February 2009 – Rotorua Exporters

    2. ABOUT NZECO • New Zealand’s Export Credit Agency • Goal - to assist NZ firms win and finance export trade • Sells a range Minister of Finance Guarantees to exporters and/or financiers covering: • Political / country risks of the buyer’s country • Overseas buyer repayment risks • NZ exporter performance risks • Enabling the extension of credit to buyers or exporters • 15 existing Guarantees on risk with maximum exposure of $92.2m supporting export transactions totalling approximately $160m of exports

    3. NZECO is assisting businesses facing current market constraints • NZ Banks insisting exporters “know their buyer” and requiring trade credit insurance or other forms of payment security • NZ Banks reviewing internal credit limits on certain higher risk countries / banks • Buyers demanding longer repayment terms to offset liquidity problems • Buyers deferring cap-ex projects • Buyers less likely to pay up-front deposits without reciprocal bond • Exporter working capital constraints

    4. Medium to long term EXPORT CREDIT GUARANTEE • Offers medium to long term trade credit insurance: 360 days - 10 years+ • Covers risk of buyer default due to political or commercial events • Suitable for exporters who sell capital items or contract services of $1m+ • Enables exporters to offer extended repayment terms to buyers • Exporters can receive up front payment from the bank • NZECO works in ‘teaming approach’ with exporter and their financier

    5. Short term EXPORT CREDIT GUARANTEE • Announced 4th February 2009 in response to market • Temporary measure – up to 2.5 years • Offers short term trade credit insurance: less than 360 days • Covers risk of creditworthy buyers default due to political or commercial events • For exporters who have had limits on buyers reduced or removed or are unable to get cover. Enables banks to confirm letters of credit

    6. CONTRACT BOND GUARANTEE • Guarantee from NZECO to bank to support issuance of bond(s) to overseas buyer • For exporters that lack sufficient security to provide the bond(s) in addition to working capital required • Exporter must show managerial, technical and financial capabilities to perform contract • Enables exporters to secure additional or larger contracts

    7. WORKING CAPITAL GUARANTEE • Guarantee from NZECO to bank to allow them to extend credit to exporters who are at their bank lending limits • Banks determine eligibility amongst their client base • Suitable for exporters that lack sufficient security to finance working capital costs associated with unexpected orders or costs • Short term guarantee – generally up to 12 months

    8. US SURETY BOND GUARANTEE • Enables NZ exporters to secure contracts with US State, Federal or municipal buyers that require 100% surety bonds • Typically infrastructure type work • Exporters must show managerial, technical and financial capabilities to perform contract

    9. Contact NZECO to talk one on one Approach us to discuss your sales pipeline, or opportunities and issues. • Chris Chapman 04 917 6004 chris.chapman@treasury.govt.nz • Tim Robertson 04 917 6080 tim.robertson@treasury.govt.nz • General Line 04 917 6060