Institution details
NZECO - The New Zealand Export Credit Office (NZECO)
Key facts
- Established in 2001
- Ownership: Public
Part of the OECD
Part of the Berne Union
- 1 The Terrace, PO Box 3724
- +64 4 917 6060
- https://www.nzeco.govt.nz
Latest update: 03/12/2021
rating type | rating agency | type | rating |
---|---|---|---|
Institution rating | S&P | Foreign currency | AA |
Country rating | S&P | Local currency | AA+ |
Products
- Buyer credit
- Supplier credit
- Supplier loan guarantee
- Other products
Buyer credit
- Covers loans made to foreign buyers against non-payment
- Tenor: Greater than 1 year; repayments in equal semi-annual installments
- Cover: Up to 95% political and commercial risk cover
- Premium: Priced according to transaction risks; payable in full upfront
- Application fee: Minimum NZD 2,000 or 0.05% of requested credit amount
Supplier credit
- Covers risk of a foreign buyer or foreign bank failing to make credit payments
- Policy options:
- Direct trade credit insurance: Issued to exporter where exporter has been declined cover on a foreign buyer by a private trade credit insurer
- Top-up: Policy issued directly to the exporter seeking an increase to the buyer limit in excess of amount provided by private trade credit insurer
- L/C guarantee: Issued to exporter’s bank to confirm L/C issued by foreign bank - Coverage:
- Direct trade: Between 80% and 90% for commercial and political risks
- Letter of credit confirmation: Up to 100% cover
- Excludes disputes - Tenor: Maximum 360 days; usually less than 120 days
- Fees:
- Upon application approval, a premium is charged and must be paid prior to start of export contract
- Premium based on commercial risk, political risk, tenor, and payment structure of export transaction
- Minimum assessment fee NZD 500 per buyer limit
Supplier loan guarantee
- Guarantee to supplier’s bank
- Use of proceeds typically to support:
- Seasonal, multiple, or large orders
- Purchase capital equipment to produce exports
- Cover cash shortfalls or delayed payments caused by buyers
- Offer operating leases to buyers
- Provide working capital until equity investments are secured - Fees:
- Initial assessment NZD 1,000
- Per annum fee on guaranteed amount ranges from 4%–6%
Other products
- General bond guarantee:
- Issued to exporter’s bank/bond provider to cover losses if exporter fails to properly perform contractual obligations and the bond is called
- Cover: Up to 100% of the bond amount
- Types of bonds that are supported: Bid bond, advance payment bond, performance bond, and warranty/maintenance bond
- Fees: Premium based on assessment of credit and performance risks, typically 1.5%–3% per annum, and initial assessment fee NZD 1,000 - Surety bond guarantee:
- Guarantee issued to surety bond provider to cover losses if exporter fails to properly perform contractual obligations and the surety bond is called
- Cover: Typically, 100% of surety bond value
- Fees: Initial assessment fee of NZD 1000
- If NZECO approves the application, premium is not charged for an initial bid bond or bond ability letter in support of the exporter’s tender
- If an exporter is awarded a contract and surety bonds are issued, then NZECO will charge a premium against the surety bond amount
Modality | Tenor | Cover type | coverage |
---|---|---|---|
Supplier credit | Short-term | Comprehensive | 80%-100% |
Performance highlights
What's new?
- Eligible companies must be registered in New Zealand or be an international subsidiary of a New Zealand registered company
- Insurance policy does not cover contract cancellation or non-payment resulting from exporter’s negligence or a contract dispute unless the exporter obtains a judicial or arbitration judgment in their favor
- Anti-bribery declaration
- The maximum aggregate liability is NZD 740 million
- Eligibility: - Written evidence by exporter to demonstrate that there are New Zealand economic benefits arising from the underlying exports - New Zealand registered company
- The credit term should not exceed the economic life of the exported good
- NZECO does not offer 100% political and commercial risk cover in respect to trade credit insurance for open account terms
- Currencies: NZD, AUD, USD, CAD, EUR, JPY, CNY, and GBP