Assessing private sector borrowers

  • Case-by-case assessment
  • Sustainable business case
    • Tenure of the loan
    • Size of the loan/leverage
    • Securities
    • covenants
  • Same terms & conditions as residual guarantor/lender
  • Industry segments, market conditions
  • Additional financing resources
  • No civil construction can be covered by loans from Norway
    • So roads to the site cannot be financed
    • Electricity, water and sewer infrastructure to plot needs to be already in place or be financed outside the project by client.

For a private client: A export credit from Norway can maximum cover 85% of 85% of a project

  • If a project is 100 then a export credit can guarantee 72,25% with a low interested loan
  • In a certain scenario KRS could offer a sales credit
  • The remaining needs to be financed by client and needs to be in cash
  • The loans are operated by local bank on behalf of GIEK and Export Credit

Maximum 23% of export contract value can be local costs

  • Minimum 30% of export contract value of goods and services delivered to the project have to be Norwegian.
  • The interest will be Nibor + 2% + risk premium from local bank

Example: If Nibor is 1,4% and the local bank de-  cides a premium of 2% the interest will be:  1,4%+2%-2% = 5,4%

  • Term is 10 year series loan for developing countries
  • Grace period 6 months form start of credit facility
  • If client needs better terms f.ex 12-15 years term and longer grace period the client  need to negotiate that financial package  with their local bank.
  • For a public client: A loan from Norway can cover 85% of a project with a state  guarantee from clients country Treasury,  often would a international bank be  willing to lend the remaining 15%. So a  potential 100% financing solution.

Loans from Export Credit Norway must be guaranteed by the Norwegian Guarantee Institute for Export Credits (GIEK) and/or financial institutions at all times. This means that the guarantors guarantee that they will compensate Export Credit Norway for any losses arising in a situation where the borrower is unable to service the loan.

The borrower will need to pay a guarantee premium to the loan guarantors in return for their assumption of this risk. Typically, the financial institutions involved in such arrangements are commercial banks, but may also include insurance companies. The guarantors must have a long-term credit rating of at least BBB, and be approved by Export Credit Norway.