Insuring export business as exporter/bank
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.
- 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)
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.
- 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.
- Under supplier credit cover
- 5 % for political risks
- normally 15 % for commercial risks; for a limited period of time until the end of 2016 the uninsured portion can be reduced upon application to 5 % against the payment of a premium surcharge.
- Under buyer credit cover 5 % for all risks
For advice please contact
Mr Ulrich Schulte Lünzum, phone: +49 (0) 40 / 88 34 - 94 84
Mr Kai-Henning Kiehn, phone: +49 (0) 40 / 88 34 - 91 37
Ms Elke Wilts, phone: +49 (0) 40 / 88 34 - 95 32
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 (German version only, 292 KB),
Annex: contact details (German version only, 84 KB)
Hermes Cover Special: Project Finance - decision process and FAQs (199 KB)
Project information memorandum in project finance: PIM (100 KB)
Dynamic application form for exporters (German version only, 829 KB)
Barrier-free (static) application from for exporters (German version only, 1.78 MB)