7. July 2020
The Federal Government adopts a 5-point package of measures to further support the German export industry
Improvements to enhance liquidity, financing and refinancing – exporters and banks will benefit – “shopping line cover” provides incentives to “buy in Germany”
With effect from 1 July additional measures came into force that aim at improving the liquidity of exporters and importers, facilitating the financing of transactions and increasing the refinancing possibilities for banks.
In particular, the Federal Government adopted the following 5-point package of measures to support the German export industry (see also the fact sheet, link)
720 days buyer credit at special conditions (limited until 30.06.2021)
Even sound, well-managed foreign buyer companies with a functioning business model are faced with liquidity constraints in the current crisis. In order to allow well established customer relationships to be maintained, the Federal Government decided to improve the financing of Hermes-covered business at short credit terms. As of 1 July 2020 the Federal Government offers importers the 720 days buyer credit, a financing instrument at special conditions which eases the strain on the buyer’s liquidity. The credit period has a maximum length of 720 days and may be repaid in one amount at the end of the credit period (bullet payment). Interim payments are dispensed with. The down payment, which has to be made before the risk commences, has been reduced to five percent.
Subsequent financing of transactions based on supplier credits (limited until 30.06.2021)
Secured export business on supplier credit basis may subsequently be financed with a medium/long-term buyer credit provided that supplier credit cover exists and the policyholder can justify his financing request with developments caused by the coronavirus pandemic.
With the “shopping line” cover, the Federal Government breaks new ground. It is a special form of buyer credit cover and deliberately puts the importer into the focus. It thus makes it easier for German exporters to gain access to procurement programmes of foreign buyers with a high credit rating.
And this is how the new type of buyer credit cover works:The Federal Government provides cover for a credit line extended to a foreign buyer. The foreign buyer can then order goods and services from German exporters. The bank pools these transactions afterwards in one credit tranche with a uniform repayment profile. This credit tranche is then recorded against the Hermes-covered credit line.
“Shopping line” cover offers a number of advantages to buyers of German goods: Already at a very early stage, they can get an indication as to the amount of a possible credit line. Besides, they benefit from the good financing terms that are linked with cover from the Federal Government.
In addition, the administrative burden is reduced due to the pooling of orders. This results in the placing of small orders in Germany becoming more attractive. “Buy in Germany” – this is worthwhile especially for small tickets in future thanks to “shopping line” cover. Thus, new markets will be opened up in particular for German SMEs. For the banks financing exports there are also facilitations because the documentation of the credit transaction is considerably simplified.
In order to make “shopping line” cover even more attractive, especially for existing customer relationships, transactions executed before an application for cover was filed may also be included in the cover subject to certain conditions being met (“reach back”).
For the provision of cover for his export transaction the policyholder pays a premium that is commensurate with the risk. The premium amount is determined by three parameters: the country risk category of the buyer country, the credit’s repayment term and the buyer’s credit rating. In order to cushion the exporter from a liquidity squeeze caused by the coronavirus pandemic, the Federal Government adopted some relief measures in connection with premium payments.
In the event of extensions of the repayment period (limited until 30.06.2021)
In individual cass, no premium may be charged for the longer horizon of risk resulting from an extension of a credit’s repayment period which becomes necessary because of coronavirus-related developments in order to avoid a loss. This may also apply to cases where interest on credit extensions (up to a maximum of the original interest rate) is included in the cover.
In connection with premium maturities (limited until 30.06.2021)
Prior to the commencement of risk: If the delivery/service/manufacturing periods remain unchanged, the policyholder has the option, in exceptional cases, to pay the premium not until the commencement of manufacturing (instead of upon receipt of the guarantee document) or, in the event of big-ticket transactions, 100 percent of the premium not until the commencement of risk (instead of 25 percent already when the guarantee document is handed over).In the event that the delivery/service/manufacturing periods are postponed by more than three months, it is possible to base the due date for the payment of the premium on this changed commencement of risk way of exception.If, in rare cases, it should be necessary to postpone the due date for the payment of the premium until after the commencement of risk, this may also be possible; however, in particular budgetary and legal provisions and the OECD Consensus have to observed when looking into the specific case.
In connection with Wholeturnover Policies (limited until 31.12.2020)
For the tried and tested Wholeturnover Policies of the Federal Republic of Germany (APG) the premium rate for a new policy year is calculated on the basis of the loss experience, among other things. In order to mitigate premium increases caused by the effects coronavirus pandemic, the loss-related standard premium surcharge is automatically reduced from 10% to 5% in future for coronavirus-related claims becoming due for payment between 01.03.2020 and 31.12.2020.
Introduction of a new type of the Securitisation Guarantee for refinancing through German Pfandbriefbanken (not limited in time)
For the refinancing of Hermes-covered export credits through German Pfandbriefbanken, the Federal Government introduced an additional type of the Securitisation Guarantee. This enables non-Pfandbrief banks to obtain refinancing from Pfandbriefbanken under a guarantee from the Federal Government subject to certain condition being met and thus improves the possibilities for export finance.
KfW refinancing programme
The existing refinancing programme of the KfW for state-supported export credits is limited in time until the end of the year. The Federal Government is already discussing with the European Commission how the programme can be extended and its terms and conditions adapted.
Applicability of the preconditions for disbursements of buyer credits also to portfolio business (not limited in time)
At the end of last year, the precondition for disbursements of buyer credits were simplified. For example, in connection with big-ticket projects the requirement that the exporter must prove the delivery and the bank must check that proof for plausibility may be limited, upon request, to such supplies and services that were recognized in advance as essential. Providing evidence that the required down-payment was made by the foreign buyer or, in course of a reimbursement procedure, the purchase price was paid by the foreign buyer has also been simplified.Previously, the modified preconditions for disbursement applied exclusively to newly granted buyer credit guarantees. Now, as a rule, they also apply to portfolio business. This is an important contribution towards enabling banks to disburse covered buyer credits even faster in future.
Right to opt for a lump sum indemnification of non-performing loans (not limited in time)
The Capital Requirements Regulation stipulates equity requirements for non-performing loans. In order to counter any negative effects on Hermes-covered finance, the Federal Government introduced the option of a lump sum indemnification of non-performing loans. The bank receives, on request, the indemnification in full (subject to a technical limit). This reduces the strain on the banks equity.The right to opt for a lump sum indemnification can be flexibly exercised from the date when the first claim for indemnification is filed until the indemnification procedure is completed.
30. March 2020 / 15. October 2020
Export Credit Guarantees for EU and OECD Countries
The European Commission decided to widen the scope for state export credit guarantees to include export business on short payment terms (up to 24 months) with EU and selected OECD member states. The Federal Government pressed for the exemption from the Short-term Export-credit Insurance Communication now published as part of its protective shield for the economy and implements it with immediate effect in favour of the German export industry.
The exemption applies to all 27 EU member states as well as Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, the USA and the United Kingdom and, for the time being, is limited until 30.06.2021.
Please find information on your options to protect your export business, the application procedures and contacts at Euler Hermes on this page.
3. March 2020
What you need to know
The coronavirus is leaving deep traces on the global economy and export-oriented companies in Germany. The Federal Government’s export credit guarantees (Hermes Cover) provide you as a customer with one of the key foreign trade promotion instruments, offering flexible, effective and comprehensive support, especially in serious situations such as the 2008 financial crisis or the current corona crisis. This instrument particularly proved its value during the last financial crisis, and the guarantees available under the 2020 budget are sufficient to fund a comparable increase in cover requirements.
Here we would like to answer your questions in this connection and provide you with information on the Federal Government’s export credit guarantees.
Important information on the export credit guarantees – questions and answers
Yes. If you have any specific questions on the cover available, please contact Euler Hermes AG +49 (0) 40 8834 9000).
The coronavirus does not result in the cancellation or limitation of existing cover. Eligibility for indemnification under Hermes Cover depends, among other things, on the type of guarantee instrument and compliance with the preconditions for indemnification.
The package of measures unveiled by the two Federal Ministers Scholz and Altmaier on 13 March 2020 is a comprehensive aid programme which is intended to help protect employees and companies from the adverse economic effects of the coronavirus. The package comprises a number of financing and guarantee instruments, including the Federal Government’s export credit guarantees. In the current crisis, they will continue to be available for covering export transactions and financing. The export credit guarantees, which shield exporters and banks from losses due to bad debts caused by economic and political factors, are granted on the basis of extensive budgetary authorisation. If additional cover for exports is required, this authorisation can be extended very quickly. Consequently, sufficient funds are available for the Federal Government’s export credit guarantees to provide effective protection for exporters and banks in these difficult times.
The Federal Government’s export credit guarantees are an important element of risk management for export-oriented companies. In times such as these, however, they are gaining additional importance for exporters because even long-standing and solvent customers can suddenly face payment difficulties through no fault of their own as a result of the corona crisis. With its export credit guarantees, the Federal Government offers you extensive protection as the risk of default is largely transferred to the Federal Government. In practice what this means is that if your customer is unable to honour its payment obligations, the Federal Government will step in. Whether your foreign customer is still obliged to pay despite the corona crisis depends largely on what is stipulated in the applicable contract. If, for example, your customer can rely on a force majeure clause to terminate the contract, it will no longer be under any obligation to pay.
Consequently, we recommend that you check your contracts to see what they say:
- How are the risks of unforeseen events occurring during the performance of the contract distributed?
- Are there any rights of termination?
- Do you bear the procurement risk if your subcontractors are unable to deliver on time due to unforeseen circumstances or do you yourself have the right to terminate the contract in order to prevent contract bonds from being drawn on?
You can apply for contract bond cover with the Federal Government to cover the risk of contract bonds being drawn on despite termination of the contract on your part.
The export credit guarantees are granted on the basis of extensive budgetary authorisation, which can be extended at very short notice if necessary. Sufficient funds are available to support exporters and banks.
Eligibility for cover and the justifiability of the risk involved in the transaction remain the decisive criteria for the issue of export credit guarantees. Both criteria must be examined and found to have been satisfied in the application procedure for each individual case. This applies equally in a crisis situation. However, the responsible ministries and Euler Hermes, as the mandatary of the Federal Government, are doing their utmost to ensure that decisions are taken as quickly as possible.
As a basic rule, export credit guarantees are available to all exporting companies that have their registered office in Germany.
Eligibility for cover and the justifiability of the risk involved in the transaction remain the decisive criteria for the issue of export credit guarantees. Both criteria must be examined and found to have been satisfied in the application procedure for each individual case. The economic impact of the coronavirus may play a role in this process.
In the current crisis, the Federal Government and Euler Hermes, as the mandatary of the Federal Government, are doing everything in their powers to make the processing of applications as unbureaucratic and fast as possible. Appropriate organisational and personnel arrangements have already been taken. Irrespective of all efforts to keep the application processing period as short as possible, the processing time depends materially on the complexity of the transaction to be covered and the quality of the documents submitted by the applicant.
As a general principle, all requests for cover must be submitted before the risk commences. This means that supplier credit cover must be applied for before the start of delivery and manufacturing risk cover before production begins.
Hermes Cover offers exporters protection against losses due to bad debts. This also applies if the insolvency of your foreign customer is the result of a pandemic. If your customer is unable to meet its payment obligations, the Federal Government will generally step in. The existence of a valid payment obligation is decisive!
Whether your foreign customer is still obliged to pay in spite of the corona crisis again depends largely on what your contract says. If, for example, your customer can rely on a force majeure clause to terminate the contract, it will no longer be under any obligation to pay.
The corona crisis does not result in the cancellation or limitation of existing cover.
For legal reasons, export credit guarantees may only be granted subject to payment of a premium that is commensurate with the risk. However, under certain conditions (particularly if collection of the premium would entail considerable hardship), a deferral of the premium may be possible. If necessary, requests for deferrals can be submitted informally and on a case-by-case basis.
Losses may occur either in the production phase or after delivery due to payment defaults. The Federal Government offers cover in both cases: manufacturing risk cover for losses in the manufacturing phase and supplier credit cover for a possible loss of receivables.
Euler Hermes is your first point of contact for all questions relating to export credit guarantees. Euler Hermes has been mandated by the Federal Government to process export credit guarantees
Exporters who are interested in export credit guarantees or have questions of a fundamental nature regarding this instrument should contact the Advisory Service. The business consultant can be reached on the following phone number: 040 8834 9000 or by
In addition, Euler Hermes has set up a telephone hotline for exporters and banks. Dial 040 8834 9509 to ask experts questions on the options for cover and to discuss threatened or actual payment or settlement problems.
Companies and banks that have questions about existing cover should also contact the hotline.
Cover in the event of default due to the coronavirus – questions and answers
Manufacturing risk cover – risks in the predelivery phase
Manufacturing risk cover primarily offers protection against the financial consequences of a production stoppage. If, as a result of a risk coming within the scope of manufacturing risk cover, it is impossible or at least unreasonable for you to continue manufacturing and/or to ship manufactured goods, indemnification is fundamentally available to cover the prime costs you incurred. This may be the case if, for example, your foreign customer is unlikely to feel bound by the contract due to the effects of the coronavirus. If you have manufacturing risk cover in place, it is important to inform the Federal Government’s mandatary, Euler Hermes AG, immediately of any delays in delivery and performance that may be required. Please note that such delays require the Federal Government’s consent.
Manufacturing risk cover primarily offers you protection against the financial consequences of a production stoppage. If, as a result of a risk coming within the scope of manufacturing risk cover, it is impossible or at least unreasonable for you to continue manufacturing and/or to ship manufactured goods as it must be expected that your foreign customer will no longer feel bound by the contract, indemnification is fundamentally available to cover the prime costs you incurred.
Epidemics, pandemics, etc. are cases of force majeure that are not recognised as political causes of loss.
The guarantees for commercial risks protect you in the event that continued production and/or shipment of the finished goods is no longer reasonable for you due to the insolvency of your foreign customer or a breach by the foreign customer of the contract, or if the foreign customer fails to pay the cancellation costs to which you are entitled in the event of ordinary termination of the contract.
Please check whether and, in particular, from what point in time your foreign customer may terminate the contract with you on the basis of the provisions of the applicable contract and the applicable law. If your contract contains a force majeure clause, this usually gives rise to special termination rights.
Please first of all check whether it is possible for you to find an amicable solution with your customer and, if necessary, to temporarily suspend or modify your delivery and service obligations depending on the situation. It is important for you to inform us immediately of any delays in delivery and performance that become necessary. Please note that these require our consent.
Supplier credit cover - goods have already been delivered
Supplier credit cover protects you from the risk of your foreign customer failing to pay the amounts that it owes you provided that you are actually legally entitled to claim such amounts. Loss caused by the coronavirus may constitute force majeure and thus render the claim void. If you have taken out supplier credit cover, you must notify the Federal Government’s mandatary, Euler Hermes AG, immediately of any delays in delivery or performance and, of course, any delays in payment. Please remember that any postponement of delivery and performance periods requires the Federal Government’s consent. If you wish to obtain the components you require for delivery from another supplier in order to meet your own delivery obligations, please remember that you must obtain the Federal Government’s prior consent if these entail foreign deliveries (due to the change in the proportion of foreign content).
Supplier credit cover protects you from the risk of your foreign customer failing to pay amounts legally owing to you on account of the political and economic factors (political and commercial events of loss) coming within the scope of the cover.
Epidemics, pandemics, etc. are cases of force majeure that are not recognised as political causes of loss.
If the amounts owing to you under the contract are not paid by the foreign customer due to insolvency or as a result of any other inability or unwillingness to pay, you are protected by supplier credit cover provided that you actually have a legally valid claim to recover the amount owed.
This is determined on the basis of the provisions of the contract and the applicable law. If your contract contains a force majeure clause, this usually gives rise to special termination rights which, if exercised, may prevent a legally valid claim for recovery of the amount in question from arising.
You must inform us immediately of any postponements in delivery and performance. Please remember that such delays require our consent.
If you wish to obtain the components you require for delivery from another supplier in order to meet your own delivery obligations, please remember that you must obtain our prior consent in the case of foreign component deliveries (change in the proportion of foreign content).
I have more detailed questions about my export credit guarantee and the options I have for cover
Who should I approach?
If you have any further questions, please contact the Federal Government’s mandatary Euler Hermes Aktiengesellschaft in Hamburg:
Hermes Cover Corona Task Force: +49 (0) 40 / 88 34 - 95 09
Your business consultant is also available for you on the phone or via video conference
You will find your contact person in the “On your site“ overview.
Hotline of the Federal Ministry for Economic Affairs and Energy
Hotline of the Federal Ministry for Economic Affairs and Energy for companies: +49 (0) 30 / 186 15 15 15
Ministry for Economic Affairs and Energy offers information on the coronavirus for companies:
Current information from the DIHK for companies on the corona crisis: