Short-Term Trade Credit Guarantee

Page updated 11 Apr 2012

Assisting exporters cover buyer repayment terms of less than 360 days and banks to confirm letters of credit.

A Short-Term Export Credit Guarantee from the New Zealand Export Credit Office (NZECO) is a trade credit insurance product enabling exporters and their banks to support usual repayment terms from offshore buyers’ for less than 360 days. NZECO will indemnify the exporter (or their bank) in the event their buyer subsequently fails to pay due to commercial or political events.

Eligibility

It is typically best suited to firms who:

• Have commercially sound transaction with credit-worthy buyers or banks (for LC confirmations) in normally insurable countries;
• Have confirmed that the private sector is unable to provide or continue support of the transaction on reasonable terms or conditions;
• Have proven trading history, managerial, technical, and financial capabilities;
• Sell goods or services with a New Zealand economic benefit.

Key Parameters

• Covers the risks of a buyer or a bank (for payment via LC) defaulting on repayments due to certain commercial events or political events in the buyer’s country (with cover typically up to 90%)
• The proposed transactions will be assessed by the NZECO using its existing underwriting principles and criteria
• Pricing for cover will be commensurate with the risk and costs associated with each transaction
• $150 million contingent liability established

How Do I Apply?

For direct trade credit insurance, NZECO requires an application form to be completed by the exporter and/or its bank. Please approach us as early as possible to discuss your situation.

Typical short-term export credit guaranteed transactions are outlined below:

NZECO Short-Term Trade Credit Guarantee Direct to Exporter (Example)

Source: New Zealand Export Credit Office (NZECO)

NZECO Short-Term Trade Credit Guarantee confirms Letters of Credit (LC) to Bank (Example)

Source: New Zealand Export Credit Office (NZECO)