All markets and new requirements

Exports covered by EKN have increased substantially. Companies have needed EKN in more markets and in more transactions. The need for working capital financing resulted in EKN offering a temporary solution.

During the year, it has been difficult for companies to finance their export transactions, to cover their risks and to get access to working capital credits. This is the reason behind the very substantial increase in EKN’s business.

Despite lower exports from Sweden, the volumes that have gone through EKN have increased greatly. The demand for EKN’s services during 2009 was exceptional. We issued 2,104 offers with a value of SEK 262 billion during the year, compared to 1,496 offers with a value of SEK 69 billion the year before. Demand was particularly intensive during the first half of the year, and increased in all industries.

Every year we guarantee risks in a large number of countries – 125 to 130 countries. In recent years, the main demand has been for guarantees for transactions in emerging countries such as India, Indonesia and Bangladesh. However, during 2009 we guaranteed an unusually large number of transactions in OECD countries. Many companies that have previously used EKN for particular markets now approached us with transactions across all markets. Consequently, during the year we have taken on risks in countries such as Mexico, Japan and Italy.

Offers by number, 2007-2009

Offers in Sek (million ), 2007-2009

Working capital

The lack of liquidity made it particularly difficult for companies in the early part of the year. This meant that the new solution, in which we offer guarantees for working capital financing, became important for many companies. This solution was developed towards the end of 2008.

It means that EKN shares the risk with banks and other sources of finance when these make working credits available. This makes it easier to lend to Swedish exporting companies. And because these companies were able to obtain financing during the financial crisis, they were also able to maintain their export business.

We have previously offered working capital credit guarantees to SMEs, but now offer it to large companies as a temporary solution. During the year, this solution was offered to 29 large companies, and was used by 18 of them. The total guaranteed amount was SEK 31.8 billion. The solution will be offered during the first half of 2010, assuming that there is a continuing lack of liquidity.

Temporary relaxation of the rules

EKN has received many enquiries about the possibilities of obtaining cover for short payment periods for exports to the European market, as the risk capacity on the private insurance market has from time to time been limited. Under the EU legislation on competition, EKN has since 1997 not been able to guarantee exports with short credit terms to industrialised countries, and has therefore not been able to meet this need.

Like other EU countries, EKN addressed the EU Commission at the start of the year for temporary exemption from the regulations, in view of the difficulties of obtaining risk cover on the private market. At the end of the year, the EU Commission decided that EKN could temporarily guarantee such export transactions.

Guarantees issued in 2009, volumes split by sector

Payment problems

The regions and countries in which Swedish exporting companies most often use EKN guarantees have not been as badly affected as we feared at the end of 2008, when we saw a sharp increase in the number of notified payments in arrears in the transactions.

Payment problems are an indication that losses will increase, but so far the increase in losses has been modest. The level of payments in arrears increased most sharply during the first few months of the year and then remained at a high level for the rest of the year.

Increase in indemnification payments

In 2009, EKN’s indemnification payments increased to SEK 275 million, compared with the previous year’s very low level of SEK 49 million.

The single largest item, SEK 107 million, was compensation under a contract in which EKN guaranteed lease payments in an aircraft leasing contract. EKN covers the unpaid lease charges that arose in the transaction in the early 2000s.

As for indemnification payments elsewhere, 35 debtors in 23 countries answered for the remainder. One of the year’s largest losses was for SEK 68 million for a dairy in Macedonia. The majority of debtors with payment problems are to be found in the transport and engineering sector, where the largest compensation amounts have been paid out for transactions in Ukraine, Brazil and Turkey. For the small and mediumsized exporters, losses have increased somewhat during the year, and a total of SEK 53 million was paid out in 17 transactions.