How We Price
In order for the New Zealand Export Credit Office (NZECO) to be self-supporting in the long-term, the NZECO levies a premium and application fee in relation to each of its products. These amounts are consistent with international practice and adhere to OECD and WTO guidelines.
Premium
The premium you pay for your guarantee is fixed on an individual basis and is intended to cover the risk that the NZECO is taking. Accordingly, your premium is calculated based upon factors such as the credit amount, the percentage of cover, the duration of risk, and upon an assessment of the political and commercial risks related to the transaction in question.
Political Risk
The NZECO’s assessment of political risk primarily focuses on a country’s ability to transfer currency for foreign payments.
This assessment is guided by the OECD’s country risk gradings which attempt to measure the likelihood that a country will default its external debt. The gradings range between 0 (very low risk) to 7 (very high risk).
The NZECO’s individual country gradings are listed under the Country List tab.
Other factors of a political risk assessment include the risk of intervention by a public authority and what effect the country’s regulatory environment may have on your export transaction.
Commercial Risk
The credit worthiness of your international buyer is a very important factor in assessing the commercial risk. This includes an assessment of your buyer’s ability to pay on each due date and to recover funds in the event of default. The NZECO’s assessment is based on your buyer’s financial position, market position as well as their industry and country.
The NZECO has six premium classifications of debtors:
| A | Sovereign buyers. |
| B | Important public buyers; systemic banks (i.e. first class banks, or banks that could expect support from the government, if needed); exceptional corporates. |
| C | Normal banks; first class corporates (well-established companies with strong market positions, large customer base and strong cash flows); other public buyers. |
| D | Corporates; weak banks. |
| E | Weak corporates; project risk. |
| F | Greenfield projects; very weak corporates. |
The NZECO premium is payable in full prior to the term of the NZECO’s cover commencing.
Application Fee
The NZECO charges application fees for each offer or guarantee cover issued by the NZECO.
The application fee is 0.1% of the guarantee amount applied for. The minimum application fee per case is NZD 2,000 but will not exceed NZD 40,000 per case. Application fees of NZD 15,000 and over will be rebated against the premium.
The application fee will be invoiced when the NZECO has undertaken an initial review of the transaction and determined that, on the face of it, the transaction meets the National Interest criteria and can be further processed.
Fees are negotiable under special circumstances.