Apply for a guarantee? Please click green button to the right.
Normally the exporter will apply to GIEK, whereas the guarantee will be issued directly to the lender: A Norwegian or foreign bank or financial institution. The buyer credit guarantee is generally used in connection with credits (loans) with terms in excess of two years.
The buyer credit guarantee covers instalments and interest, and it may be issued in Norwegian kroner or in any other internationally accepted currency. The conditions of sale and borrowing must comply with the OECD Consensus Agreement as regards cash payment, term, instalment plan etc.
As an example the OECD Consensus Agreement terms specify that for credits in excess of two years there must be a cash payment of at least 15 %, in other words the maximum financing must not exceed 85 %. The loan must be repaid in equal semi-annual instalments from the time of consolidation.
The guarantee normally covers both commercial and political risk. GIEK will underwrite up to 90 % of the total credit amount in connection with commercial risk and up to 100 % for political risk. GIEK will assess the borrower's repayment ability and may also offer advice and guidance on financing. Special securities or risk sharing with others may be required, particularly in connection with project financing.
In the case of project finance GIEK expects a thorough project/risk analysis to be performed by an experienced and independent source acceptable to GIEK. The project itself must generate sufficient cash to service the debt. GIEK’s risk sharing requirement can be fulfilled, for example, by one or more banks participating on equal terms with GIEK or playing some other major role. The rate of cover and other conditions will inter alias depend on what security is available.
A checklist has been made to provide a general overview of the information required by GIEK before processing major applications for project finance, for example ships' exports.
Guarantees issued by GIEK are state guarantees. Banks are not required to make provisions in connection with loans guaranteed by GIEK. The buyer credit guarantee therefore gives not only greater security and less risk, but also cheaper funding.
