Financing for ships and equipment from Norway
Norway’s maritime industry is among the world's largest and most comprehensive maritime export clusters. GIEK is working closely with banks, maritime exporters and their overseas customers within many shipping segments world-wide. The Norwegian State's AAA rating enables GIEK to expand the financial capacity of our customers and enhance their access to attractive funding.
Maritime exports (such as ships, shipping technology and parts) are capital intensive. Working closely with other financial institutions in Norway and abroad, GIEK can boost loan and credit volumes for Norwegian exporters and their customers. Funding for GIEK guarantees can also be sourced from state-owned Export Credit Norway.
GIEK has special expertise in offshore renewable energy or petroleum related projects. Our team consist of highly skilled analysts, lawyers, financial advisers and sustainability experts.
GIEK’s vessel financing services are covered by the OECD’s sector understanding on ships and by regulations issued by the Norwegian Ministry of Trade, Industry and Fisheries.
We offer:
- Tailored financing for ship-owning companies world-wide when purchasing vessels and maritime equipment from Norway.
- Guarantees for vessels built in Norway, or abroad when they contain significant Norwegian deliveries.
Long-term financing of all vessel types
GIEK’s buyer credit guarantee is often a financial key to building vessels in Norway or installing Norwegian equipment on foreign-built vessels. The guarantee insures the buyer's loan repayment to the lender, thus mitigating the credit risk.
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.
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.
- 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 this 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 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. The exporter’s bank will issue such guarantees to the buyer, but GIEK can offload a portion of the amount by issuing a counter guarantee to the bank.
Building loan guarantees to Norwegian shipyards
When banks are financing the construction of ships at Norwegian yards, GIEK's building loan guarantee can insure the shipyards' repayment of the loan. The guarantee may cover up to 50 per cent of the loan amount. Also offshore installations (such as platforms and wind turbine foundations) may also be covered. This guarantee helps the shipyard or manufacturer to secure competitive financing of construction costs.
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.
Our Premium Calculator can provide a cost estimate for buyer credit and supplier credit guarantees.
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.