Institution details

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NZECO - The New Zealand Export Credit Office (NZECO)

Key facts

  • Established in 2001
  • Ownership: Public
Part of the OECD Part of the Berne Union

Latest update: 03/12/2021

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

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