A

B

Berne Union International union of credit and investment insurers, with members from over 40 countries.

Bond A security presented by exporter in favour of buyer, developer or other client. This security is normally in the form of a bank or insurance company guarantee and is made out for tender, contractual obligations and/or payments received.

Buyer credit Credit given by bank to buyer or buyer’s bank.

C

Combined guarantee Guarantee given to two parties concerning same transaction: a guarantee to exporter for loss on production and a guarantee to bank for loss on claim.

Commercial event Debtor has become insolvent or for other reasons fails to pay. EKN’s commercial events guarantee covers e.g. risk of buyer bankruptcy or other non-payment of contract.

Consensus agreement OECD arrangement on guidelines for officially supported export credits, which includes cash payment requirements, rules for repayment terms etc.

Counter guarantee Covers risks for issuers of bonds in conjunction with Swedish export transactions. The guarantee covers both unfair calling of a bond and legitimate calling, that is, when an exporter fails to fulfill the offer or commitments in the export transaction. The issuer of the bond can be a Swedish or foreign bank or insurance company in the OECD area, while the exporter must be Swedish.

Credit information Information supplied by a credit agency on the economic circumstances of the buyer/borrower. Applications for an EKN guarantee covering commercial risks should be accompanied by such credit information (maximum six months old).

D

Debt rescheduling Postponement of a country’s debt payments. Due dates in original credit contracts are renegotiated within Paris Club frameworks and deferred in a debt rescheduling agreement according to an agreed timetable of repayments.

Debtor Buyer of goods/services covered by agreement, or borrower in cases of loan agreement. Buyer and lessee are here equated. Debtor status is either public or private. A private debtor is defined as one which can be declared bankrupt.

E

ECA Export credit agency.

Environmental policy for EKN EKN conducts an environmental survey prior to export projects in business sectors normally deemed environmentally sensitive. Sectors primarily open to environmental surveys are: power industry; construction and contracting operations; infrastructure projects; pulp and paper industry and mining, steel and chemical industries.

Excess The percentage of loss incurred which is not compensated by the guarantee, usually 10 per cent in the case of commercial events. Excess for political risks is not normally applied.

Exchange loss compensation Payment to guarantee holder on recovery as compensation for exchange loss incurred by guarantee holder at time of loss due to maximum exchange rate cited in guarantee commitment. Not valid for guarantees issued after October 1996.

Export credit guarantee Insurance against loss in connection with export contracts.

G

Guarantee amount The maximum financial sum EKN is responsible for under a guarantee commitment, normally maximum financial loss minus excess.

Guarantee commitment Document through which EKN shoulders responsibility for a guarantee, in return for payment of premium. A guarantee commitment is issued once a contract is unconditional or – depending on type of guarantee – following delivery/payment.

Guarantee for exporter’s loss on production/loss on claim Guarantee covering exporter’s risks in individual transactions, either due to risk of costs incurred following partial or total cancellation of contract, or interruption of agreed undertakings of six successive months, or non-payment.

Guarantee for loss on bonds Covers risks connected with Swedish exporter’s presenting of securities (bonds) in favour of a foreign buyer for completion of a tender or agreement. The guarantee covers unfair calling of such bonds.

Guarantee for physical loss Guarantee covering risk of expropriation or loss of or damage to property used in work abroad due to political events such as war, revolution or similar. Such guarantees normally presume the issue of a concurrent export guarantee against loss on production/loss on claim.

Guarantee holder Possessor of EKN guarantee.

Guarantee in favour of lender Guarantee covering risk of non-payment to Swedish or foreign bank when lending to foreign importer or importer’s bank in connection with export transaction.

Guarantee offer Offer to applicant agreeing to issue a guarantee under conditions and requirements stipulated in the offer. Valid six months following EKN’s decision. Extension applied for through EKN, whereupon risk is re-examined . Extension is for three-month intervals and carries an extension fee.

Guarantee percentage The percentage compensated by EKN of the loss incurred, in accordance with guarantee commitment issued. EKN usually applies no excess for political risk. Thus guarantee percentage is 100 per cent in this case. Cover for commercial risk is normally 90 per cent.

H

HIPC Heavily Indebted Poor Countries: an initiative by the IMF and the World Bank for dealing comprehensively with a country’s debt problem . This initiative commenced in autumn 1996 directed at the world’s poorest nations.

I

If-and-when contract Contract where debtor is liable to pay only if and when debtor in turn receives payment from own debtor (end buyer).

Indemnification Decision to pay compensation and payment of this under EKN’s guarantee commitment.

Intermediary transaction Transaction where due to legislation or otherwise in import country the exporter must sign a contract with an intermediary in import country instead of with end buyer. Under certain circumstances EKN may issue a guarantee for risks on buyer.

Investment guarantee Guarantee covering risks incurred by Swedish investors making new investments abroad. Relates to host country political risks and may cover both capital and return on investment.

J

Joint guarantee Applicable when exporter has subcontracted if-and-when supplies from another country, and the guarantee agencies in exporter country and subcontractor country insure the transactions of their domestic exporters. EKN has signed joint guarantee agreements with several other guarantee agencies.

L

Letter of credit guarantee Guarantee covering bank risk against payment default under confirmed letter of credit. EKN guarantees up to half the risk sum under a letter of credit. 

Local costs Such expenditure for goods and services in the buyer’s country, that are necessary either for executing the exporter’s contract or for completing the project of which the exporter’s contract forms a part.

Loss on claim Guarantee holder loss due to failure of buyer/borrower to settle an undisputed and due claim within a specific time period after due date.

Loss on claim guarantee for exporter Guarantee covering risk of non-payment to exporter or leasing company in individual transactions.

Loss on production Loss suffered by guarantee holder due to cancellation of contract, or resulting from interruption preventing fulfilment of contract for six continuous months minimum and which cannot be classified as loss on claim.

M

Matching EKN decision to approve more favourable conditions than normal, such as longer period of credit, where proof exists that foreign competitor to exporter is in receipt of state support for such conditions from its country’s guarantee institution.

Maximum loss amount The sum covered by EKN’s guarantee, used as the basis for computing the sum of any eventual indemnification.

P

Paris Club A forum where public and state guaranteed credits are renegotiated when a country has such payment problems as to be unable to honour its undertakings. Paris Club negotiations result in a framework agreement between debtor country and creditor countries involved on a debt rescheduling.

Payment guarantee A form of personal surety, e.g. from a bank

Period of credit Period of time agreed between parties involved in an export transaction or export credit, which runs from starting point of credit to date of payment (due date).

Political event Transfer constraints, steps by authorities preventing or delaying completion of the agreement, general moratorium, war, natural catastrophe or other extraordinary event preventing completion of the agreement.

Premium The sum charged by EKN for issue of a guarantee.

Q

Qualifying period Period of time from due date which must lapse before EKN’s indemnification liability operates.

R

Rate of interest on rescheduled debts Interest paid during a debt rescheduling agreement.

Re-rescheduling A new debt rescheduling agreement is established following default of due payment according to an earlier debt rescheduling agreement.

Recovery Payment received from debtor or debtor country after indemnification.

Reinsurance Risk sharing between guarantee institutions in different countries. Applied when exporter has fixed subcontracted supplies from another country and EKN wishes to spread risks through risk partition with the guarantee institution in subcontractor’s country.

S 

Supplier credit Credit given by supplier (exporter) to buyer.

Swap Possibility within the framework of a debt rescheduling agreement to convert part or whole of the debt claim on a country to other forms of asset, or else to sell the claim.

Unconditional contract Agreement where all conditions have been filled for the agreement to come into force.