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Insuring export business as exporter/bank

Project Finance

Product at a glance

Project finance transactions are major projects where the operating costs and the funds for interest and redemption payments on the loans taken out are generated by the project itself. They centre round a legally and economically independent special purpose company ("SPC") which acts as borrower. Hence project finance is a form of finance which focuses on the direct revenues of the project (cash flow related lending) which does not appear in the financial statements of the investor (off balance sheet financing).

To cover this type of business supplier credit cover and/or buyer credit cover are used. Besides, a combination with other forms of cover (e.g. manufacturing risk cover, contract bond cover) is possible.

Target group

  • Supplier credit cover: German export firms
  • Buyer credit cover: German banks
    • branch offices of foreign banks in Germany
    • foreign banks (under to certain conditions)
    • foreign investors and their advisors

Payment terms of the covered transactions

Medium/long-term (up to 14 years)

Special features

Due to the complexity of project finance transactions there is an extended processing procedure. While projects are still in an early stage, the Federal Government is prepared to give a first indication of cover stating whether a project is, in principle, suitable for project finance cover and, if required, issues a Letter of Interest. After an application for cover has been submitted, a first assessment of the project on the basis of the (preliminary) Information Memorandum ("PIM") and the budgetary forecast (financial model) is carried out, the so-called "preliminary review". If the result of this assessment is positive, the applicant then will commission an expertise on the economic viability of the project. In the end, the normal decision-making bodies decide whether cover will be granted for a transaction or not.

Premium

  • Single premium calculated as percentage of the order value covered (interest excluded) as well as specific processing fees
  • For a detailed calculation there is an interactive premium calculator available.

Uninsured portion

  • Under supplier credit cover
    • 5 % for political risks
    • normally 15 % for economic risks
  • Under buyer credit cover 5 % for all risks

For advice please contact

Mr Peter Ahlbrecht, phone: +49 (0) 40 / 88 34 - 95 72
Mr Kai-Henning Kiehn, phone: +49 (0) 40 / 88 34 - 91 37
Ms Elke Wilts, phone: +49 (0) 40 / 88 34 - 95 32
Email: info(at)exportkreditgarantien.de

Downloads

Project information memorandum in project finance: PIM (100 KB)

Hermes Cover Special: Project Finance - the Essentials (226 KB)

Hermes Cover Special: Flexible terms and conditions for project finance transactions (287 KB), Adjusted Terms (109 KB)

Hermes Cover Special: Expertise for Project Financing and Structured Finance (399 KB)

Hermes Cover Special: Project Finance - decision process and FAQs (199 KB)

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