Another record-breaking result

The year coming to its end now has confirmed that the demand for the state-subsidized export insurance against risk continues to grow. This year, EGAP will insure loans for operations, bank guarantees and Czech investment abroad in the amount of app. CZK 67 billion, which means by CZK 5 billion more than in 2009 and the highest amount in the company’s history as well. This is, above all, the result and the success of the Czech companies that have been able to win recognition and make quality export contracts despite the difficult economic conditions and keen competition. This is also indicative of the fact that a growing number of exporters are looking for and finding use on markets outside the EU, and last but not least, this is confirmation of the fact that over the last few years many of the Czech exporters that started as subcontractors of foreign companies have developed to become major suppliers of large-scale investment units. EGAP has contributed to this development as a part of the state comprehensive subsidy for export.

From territorial point of view, EGAP has insured this year, as it did in last years, Czech export in particular to Russia and other countries of the Confederation of Independent States (CIS). On the other hand, it is nice to see that the interest in other markets, such as Vietnam, India and Turkey is growing and that our exporters are becoming interested in a number of Arab and African countries as well. And Latin America is still waiting for its “re-discovery”. In its everyday practice, EGAP meets requirements from exporters and their customers for project financing instead of standard export financing more and more frequently. The difference is considerable. While standard export financing is based on the debtor’s financial standing and, with a bit of exaggeration, it is possible to say that it is the debtor’s business whether he leaves his machines packed in the yard or installs them to be used for production, in case of project financing, repayment of loan is based on revenues from a newly built independent economic unit. This is of course much more demanding for the EGAP traders and analysts as, in addition to the assessment of the quality of the local investor as well as the Czech exporter, it is necessary to assess the provision of future sale and the overall economy of the undertaking concerned very carefully. Project financing is applicable to energy industry, mining and raw materials processing, metallurgy, construction materials production, telecommunications, infrastructure projects, in a word, everywhere where it is possible to secure long-term customer contracts.

According to the international rules regulating state subsidy for export, the task of EGAP is to bridge a gap on the export insurance market created by commercial credit insurance companies. This means that EGAP usually insures large-scale, complex-structured and in particular long-term risks related to financing of Czech export, moreover to countries subject to enhanced territorial risk. In other words, in particular, export of large-scale investment and technological units, machinery, etc. financed by means of long-term bank loans is concerned. The portfolio of services on offer is however much more extensive and a number of insurance products meet the needs of small and medium-size undertakings, such as insurance of credits intended for pre-export financing, which can be newly applied to financing of the science and research results commercialization, and also insurance of acknowledged letters of credit, manufacturing risk, foreign markets prospecting, bank guarantees, etc. In particular, we offer small and medium-size undertakings a very simplified version of insurance of both guarantees and pre-export credits as well. The simplification means that if the client’s rating assessed by the bank falls within the predetermined limits, EGAP accepts such a rating and provides insurance in fact automatically. The main advantage is in particular the promptness of the entire process. To this day, EGAP has entered into this agreement with Ceska exportni banka, Ceska sporitelna, Komercni banka, LBBW Bank, Commerzbank, UniCredit Bank and Citibank.

Under the state-subsidized insurance, EGAP covers a wide range of risks that the exporter and his bank may meet during preparation and implementation of the export contract. More information on the state-subsidized insurance products is available at www.egap.cz where you will find the premium calculator, the necessary forms and the contacts as well. No matter whether you will export in the next year with our insurance or without it, we wish you many interesting and successful deals.

Vlastimil Nesrsta

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