investment energy summit 2012, athens · euler hermes kreditversicherungs-ag and...

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Euler Hermes Kreditversicherungs-AG and

PricewaterhouseCoopers AG WPG.

Investment Energy Summit 2012, Athens

Export Credit and Investment Guarantees of the Federal Republic of Germany

Peter Ahlbrecht, Head of Project Finance Department

Investment Energy Summit Greece, Cyprus, Israel

Athens, March 28th-29th, 2012

Agenda

Export Credit and Investment

Guarantees

Basic Information

Export Credit Guarantees

Cover Policy and Portfolio Greece

Project Finance (PF) / Structured

Finance

Renewable PF transaction

Investment Guarantees

Mandatary business

Federal Export Credit and Investment Guarantees

on behalf of and for account of the Federal Republic of

Germany

cooperating as partners to a consortium

Basics


(“Hermes Cover”)

Promotion of exports of mainly

German origin by securing

suppliers / banks against

economic and political risks

(buyers-/ country risks)

Investment Guarantees

Support of direct investments

of German companies by

covering political risks and by

offering investors long term

protection


Promotion of German export as an objective of the

Federal Government‘s economic policy

Provide exporters access to difficult foreign markets

Support of foreign countries, in particular in difficult

phases of development and restructuring

Promotion of economic development abroad

Key element to raise funds for projects

Insurance against the risk of non-payment for

commercial and political reasons

Requirements for Export Credit Guarantees

Business that qualifies for official support

– Export transactions (goods/ services and financing

contracts) of a German exporters with goods of mainly

German origin involving non-marketable risks abroad

Criteria for the granting of cover are

– The concrete transaction/ project is eligible for support

– Commercial / political risks are justifiable

– Finance terms in accordance with common practice

– Provisions of the federal German budget law are observed

Interministerial Committee for Export Guarantees (IMA)

IMA

AA

Federal Foreign Office BMWi

Federal Ministry of

Economics and

Technology

(in charge)

BMF

Federal Ministry

of Finance

Experts

- KfW IPEX-Bank

- AKA Ausfuhrkredit-Gesellschaft

- Representatives of the export and

banking industry

Consortium Euler Hermes

PricewaterhouseCoopers

BMZ

Federal Ministry for

Economic

Cooperation and

Development

Decision-making procedure

Conditional

positive

decision

Positive

decision

Rejection

Exporter/Bank

Filing application

for an Export

Credit Guarantee

Mandataries

Examination of

application

Clarification of the

terms and

conditions /

Risk evaluation

Prepare

decision/sub-

mission to the

Interministerial

Committee

Interministerial

Committee

Unanimous

decision

Notification

that the

contracts

are

signed/the

securities

are in place

Firm

commitment

Issuance of

Policy and

invoice

Forms of single transaction cover

Supplier credit cover

Supplier credit cover for service providers

Buyer credit cover

Manufacturing risk cover

Constructional works cover

Airbus Guarantee

Project Finance

Ship Finance

Further forms of cover

Whole-turnover and revolving cover

Supplementary forms of cover

Cover Policy Greece


Medium/Long-Term Business, i. e. risk periods of more than 2 years:

– No formal restrictions

– Credit periods of up to 8.5 years

– Longer credit periods possible for project finance (14 years), renewable energy projects (18 years) and power plants (12 years)

Collateral

– Case by case decision (not generally required)

Short-Term Business

– Not eligible due to EU regulations

Covered German exports to Greece

– EUR 87.7 million (2010/2011)

Sectors41,1

637,1

134,1

35,0

2,5

2,7 15,0

12,0

1,3

Wind Power Power plants Aircraft

Subway Printing machine Tubes

Industrial complex Machines Services

Current portfolio Hermes Cover

219,5

90,6

826,2

applied agreed in principle covered

in Euro m

Project Finance/ Structured Finance

Project Finance (PF):

Implementation of a Special

Purpose Company (SPC)

Project has to earn sufficient

revenues to cover operating

costs and debt service

Off balance sheet finance

structure

Structured Finance:

“Conventional” Export Credit transactions related to already existing borrowers with additional collaterals (e.g. assigned export revenues) and further project finance elements

Project Finance – Key Elements

Legally and commercially independent project company (SPV)

with the intention to provide a solid ring-fence against third-

party interventions

Economic viable project (= requirement of sufficient cash flows

to cover operating costs and debt service commitments) as

pre-condition for cover ensures that PF projects are favourable

for all involved parties (sponsors, lenders, ECAs)

No or limited recourse against project equity providers

Clearly defined / examined budget as part of the due diligence

process

Project Finance – Pros / Cons

Benefits from the sponsor‘s view

Higher predictability for investment

decisions

Higher certainty regarding ROI-

expectations

Pre-defined investment budget

Cleary structured contractual network

– Clear assignment of responsibilities

Narrowed investment and cost overrun

risks

Off-balance sheet structure

(establishment of a legally independent

project company („special purpose

company“)

Exploitation of new funding sources

Potential disadvantages / restrictions

Higher structuring costs (legal, financial)

Only suitable for larger projects (> EUR 25 m)

Loss of autonomy regarding commercial

decisions

Limited access towards project assets pledge in

favor to the lenders

+ -

Project Finance – Reference Case

Concentrating Solar Power (CSP)

30 MW Plant in Puerto Errado, Spain

First commercially operated CSP plant using Fresnel

Technique

Expected annual production: 50 GWh

Engineering, Procurement and Construction contract

with the German Exporter Novatec Solar

Investment: appr. EUR 70 m

Limited recourse structure

Long-term PPA with a fixed tariff structure

Excurse: Investment Guarantee Scheme

►Purpose of the scheme:

– The Federal German Government supports direct investments of German

companies abroad by covering political risks and by offering investors long-term

protection

►Criteria for cover:

– German investment

– Eligibility for promotion

– Sufficient legal protection (mainly by bilateral investment treaties between

Germany and the host country)

►Figures in 2011:

– Overall exposure: EUR 31.1 bn (Statutory maximum exposure limit: EUR 50 bn)

– New cover (worldwide) for investments in 2011: EUR 5.2 bn

– Cover in principle possible / however, no Greece portfolio at present

Thank you for your attention!

Further information is provided under:

Export Credit Guarantees:

Hotline: +49 (0) 40/88 34-90 00

[email protected]

Investment Guarantees:

Hotline: +49 (0)40 / 88 34 - 94 51

[email protected]

www.agaportal.de

Peter Ahlbrecht

Euler Hermes Kreditversicherungs-AG

Tel.: +49 (0)40 / 8834 - 9572

E-Mail:[email protected]

Your questions please!

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