East West Debt, solving defaulted trade and bank debt

  about the ECGD, the Export Credits Guarantee Department

the ECGD, official export credit agency of the UK, derives its powers from the 1991 Export and Investment Guarantees Act.

• ECGD' role is to help UK manufacturers and investors trade overseas by providing them with insurance and/or backing for finance to protect against non-payment. Insurance is particularly comforting for companies who are looking to win contracts in the developing world or with buyers that they might be unfamiliar with.
• ECGD complements the insurance that is available from the private market. Private sector insurance tends only to be available for contracts with buyers in the developed world and for orders that involve relatively short delivery/credit periods and where contract values are reasonably small.
• Insurance is available both for UK exporters of goods and services, and investors in overseas projects. The ECGD Overseas Investment Insurance scheme is particularly useful for countries which need to attract inward investment to develop their economy, industry and infrastructure. top
• The largest part of ECGD's operation, however, involves underwriting finance packages to support the sale of capital goods, such as aircraft, machinery, and services and to help UK companies take part in overseas projects such as hospitals, airports and power stations.
• On average ECGD underwrites business worth over £4 billion a year. The ECGD can support finance for contracts as low as £20,000, but some of the projects we back can go beyond the £100 million mark. It is unlikely that many of these orders would go through without the availability of finance on attractive credit terms. Quite often this finance would simply not be available without the involvement of Export Credit Agencies.
• The ECGD is, for instance, able to take on longer term and higher value risks because they have the full backing of the UK Government. This is not to say, however, that the ECGD takes on risks frivolously. The ECGD works to a strict break-even remit, charging customers premium at levels appropriate to the level of individual risk and building up reserves from which to meet claims, should overseas buyers default on their payments. We also seek to make a full recovery from the buyer, unless of course we later agree to write off the amounts as the result of our Heavily Indebted Poor Country Debt & Development initiative.
• Finance provides overseas buyers with sufficient credit (between five and ten years in a lot of larger cases) to pay for high value imported goods and services in half-yearly instalments. This avoids having to pay for them immediately on receipt, when cash may be already allocated towards other resources or when revenues from the project in question may not yet be on stream. top
• It would not be practical, however, to expect UK exporters to have to wait a length of time to be paid for work they have done. This is where Export Credit Agencies step in. Most countries in the developed world have one. Export Credit Agencies provide security to enable bank loans to be made available on behalf of overseas buyers. Some Export Credit Agencies even provide loans themselves. Exporters are paid in cash from the loans as they deliver their goods, leaving the overseas buyer with the obligation to repay over the agreed credit period. We would pay a claim to the bank that made the loan available (much the same as any insurance company would if a policy-holder submitted a legitimate claim) in the event that the borrower defaulted on a payment.

Links ECA's:
CESCE COFACE COSEC DUCROIRE EKF ECGD EDC EKN ERG EXIM EXPORTERS FINNVERA GERLING-NCM GIEK HERMES HKECIC JBIC KEIC MIGA OeKB SACE