Guarantees that promote Norwegian exports
Norway’s maritime industry has developed into one of the world's largest and most comprehensive maritime export centres on the strength of its technology, flexibility and reliability. GIEK has deep industry expertise and has been a key financing partner for buyers in a variety of shipping segments worldwide.
Maritime exports are often highly capital intensive. GIEK’s guarantees help expand loan and credit volumes for Norwegian exporters and their customers. We work closely with Export Credit Norway as well as Norwegian and foreign commercial banks.
GIEK has extensive experience in ship and maritime export financing, with special expertise in maritime financing related to offshore petroleum and renewable energy. GIEK has skilled analysts, lawyers, financial advisers and social responsibility experts.
GIEK’s vessel financing services are covered by the OECD’s sector understanding on ships and by regulations issued by the Ministry of Trade, Industry and Fisheries.
We help with:
- Tailored financing for buyers of all types of vessels.
- Guarantees for vessels built in Norway or abroad with significant Norwegian content.
Long-term financing of all types of vessels
GIEK’s buyer credit guarantee is normally regarded as the financial key to building vessels in Norway or installing Norwegian equipment on foreign-built vessels. Such guarantees ensure loan repayment to the buyer’s lender, thus mitigating credit risk.
GIEK has good experience participating in custom financial structures and have good relationships with most of the major banks within ship financing.
- Debt financing of up to 80 per cent of the sales contract value.
- GIEK can guarantee against up to 90 per cent of commercial risk and up to 100 per cent of political risk.
- At least 30 per cent of the export contract must consist of Norwegian goods, services or value creation.
- Maximum term of GIEK’s guarantee is 12 years, with linear repayment schedule.
-
Participation by a commercial bank or financial institution, with a requirement that risk is assumed on the same terms as GIEK (pari passu).
The above financing terms are maximum values, and final financing terms are determined on the basis of credit risk in the particular transaction. In assessing credit risk, GIEK emphasises such factors as collateral, contract robustness, earnings potential and the experience of the operator.
A typical ship financing deal with GIEK’s participation is based on 30–40 per cent equity and a GIEK guarantee for 70 per cent of the loan.
Read more about Buyer credit guarantee.
- We have been very happy to benefit from the Norwegian export credit agency support, making up with Vard a comprehensive offer delivered in a very professional way, says Jean Emmanuel Sauvée, CEO of Ponant.
Second-hand sale and retrofit equipment for vessels
GIEK can participate in the financing of second-hand sales as long as the vessels in question are sufficiently tied to Norway. This is particularly relevant if the sales lead to construction in Norway. GIEK can issue guarantees for amounts in excess of retrofit costs.
For more information about financing of vessel retrofits and modernisation, please download the brochure published jointly by Export Credit Norway and GIEK.
Long-term financing of charter parties
In GIEK’s experience, charter party contracts are normally regarded as a provision of service. Only charter parties that concern projects/fields under development or that otherwise have the character of an investment in future revenue will be able to qualify for long-term financing with GIEK’s participation.
GIEK will generally cover only charter party contracts entered into by Norwegian companies. If a Norwegian company has signed a contract involving sub-supplier deliveries to a charter party contract between a foreign company and the charterer, GIEK’s participation will normally be limited to the value of the Norwegian contract.
- Debt financing of up to 85 per cent of contract value.
- GIEK can guarantee against up to 90 per cent of commercial risk and up to 100 per cent of political risk.
At least 30 per cent of the export contract must consist of Norwegian goods, services or value creation. The maximum term of GIEK’s guarantee is 8.5 years, with a linear repayment schedule.
Guarantees for advance payment, performance and more
Foreign buyers and shipping companies sometimes require a Norwegian exporter to provide one or more guarantees to ensure, for example, that maritime equipment will be delivered as agreed, that a shipping company’s advance payments will be repaid if the shipyard breaks the contract, or that a ship will perform as intended on delivery. It is the exporter’s bank that issues such bond guarantees to the buyer, but GIEK can assume risk for a portion of the amount (counter guarantee).
-
GIEK issues a guarantee to a bank or financial institution.
-
The guarantee normally covers up to 50% of the bank/financial institution’s risk.
-
Examples of bond guarantees are tender guarantees, advance guarantees or completion guarantees.
Read more
Building loan guarantees to Norwegian shipyards
A building loan guarantee ensures banks of repayment of the loans they issue to Norwegian shipyards for ship financing during the period of construction, at up to 50 per cent of the loan amount. Other offshore installations, such as platforms and wind turbine foundations, may also be covered. Such a guarantee helps the shipyard or manufacturer to secure competitive financing of construction costs incurred during the construction period.
Read more about Building loan guarantees.
Cost
For ship financing, the pricing is market based. Upon issuing a guarantee GIEK charges a premium that is generally calculated as a one-time premium, but an annual premium is possible in cases of bank participation exceeding 20 per cent.
The premium amount depends on the repayment period, and is also affected by the buyer's creditworthiness. GIEK assesses customer creditworthiness, i.e. the probability of payment by the customer.
GIEK also charges an upfront fee and a commitment fee.