Financial guarantee products for exporters
The Export Credit Office (NZECO) is New Zealand’s official export credit agency. NZECO sells a range of New Zealand government backed trade credit insurances and financial guarantees that mitigate credit risk, and can assist exporters or their international buyers’ access to credit. This can make all exporters more competitive to secure export sales. NZECO does this by working closely with exporters, their bankers, bond providers, and international buyers.
On this page:
- NZECO Credit Insurance Products diagram
- Solution: Mitigate repayment risk
- Solution: Secure Export Sales
- Solution: Access Trade Finance
- Basic key eligibility criteria for all NZECO products
- Documentation required by the NZECO to assess a transaction
The NZECO may assist exporters to mitigate the effects of a buyer cancelling a contract or defaulting on its payments, as a consequence of commercial or political events beyond an exporter’s control.
- Exporters with a long production period or who produce custom-made products run the risk that their buyer may cancel the contract prior to delivery, leaving the exporter with incurred costs that cannot be recouped. NZECO pre-credit insurance covers the accumulated costs an exporter is unable to invoice as a result of a buyer’s contract repudiation.
- Insuring credit terms of up to 360 days that an exporter provides their international buyers. The NZECO may cover up to 80% of an exporters receiveables where the private sector is unable to provide support on commercially reasonable terms.
- Buyers of exports with a longer economic life may seek a repayment term greater than one year. The NZECO may insure up to 95% of a credit amount provided to creditworthy international buyers.
- Particularly in emerging markets or with a new buyer, the use of documentatry letters of credit can help protect your export revenue. The NZECO may underwrite the letter of credit issued by your buyer’s bank in the event your bank has limited capacity.
When negotiating export contracts the finance terms offered to, or required by an international buyer, may be a critical element of securing the deal.
Working in partnership with an exporter’s bank, the NZECO may help successful exporters secure overseas contracts by enabling them to:
- Offer extended repayment terms and a competitive financial package to credit worthy buyers.
- Issue bonds or bank guarantees that are required by international buyers to undertake tenders or contracts.
- Bid for, and accept, US contracts that have 100%+ surety bond requirements.
NZECO works with banks to address the trade finance challenges exporters face when delivering on export contracts. The NZECO’s guarantee and credit insurance products may be assigned or issued directly to an exporter’s bank to enable an exporter to access additional trade finance or bonding facilities. We can assist banks:
- Discount international trade receivables, bills of exchange and letters of credit by ensuring that the international buyer or bank will repay.
- Enter into loan agreements with international buyers for the purchase of goods and services from NZ exporters.
- Provide bonding facilities to proven exporters that otherwise lack sufficient collateral to enable them to execute export contracts.
- The NZECO can explore other financial solutions with exporters, for example offering an advance payment bond to a buyer to enable a higher upfront payment to assist with cashflow.
- Have commercially sound transactions.
- Transactions supported by the NZECO must have a direct financial and or indirect benefit to New Zealand.
- NZECO is also required to meet NZ Government and other International guidelines in regards to export credits.
- Audited financial accounts or management accounts for the previous two financial years, including statements of financial position, income, equity and cash flow (including the notes associated with these accounts).
- Trading and repayment history between the exporter and buyer.
- A description of the export transaction and the exporter’s proven ability to deliver.
- Interim management accounts, business and market analyses, cash flow forecasts and other technical information may also be sought.
Find out more about the New Zealand Export Credit Office.