Trade Finance Tools for Exporters Tim Robertson 04 917 6080

1. Helping New Zealand’s exporters exploit trade opportunities. Trade Finance Tools for Exporters Tim Robertson 04 917 6080 19th February 2009 – Rotorua Exporters

2. ABOUT NZECO • New Zealand’s Export Credit Agency • Goal - to assist NZ firms win and finance export trade • Sells a range Minister of Finance Guarantees to exporters and/or financiers covering: • Political / country risks of the buyer’s country • Overseas buyer repayment risks • NZ exporter performance risks • Enabling the extension of credit to buyers or exporters • 15 existing Guarantees on risk with maximum exposure of $92.2m supporting export transactions totalling approximately $160m of exports

3. NZECO is assisting businesses facing current market constraints • NZ Banks insisting exporters “know their buyer” and requiring trade credit insurance or other forms of payment security • NZ Banks reviewing internal credit limits on certain higher risk countries / banks • Buyers demanding longer repayment terms to offset liquidity problems • Buyers deferring cap-ex projects • Buyers less likely to pay up-front deposits without reciprocal bond • Exporter working capital constraints

4. Medium to long term EXPORT CREDIT GUARANTEE • Offers medium to long term trade credit insurance: 360 days - 10 years+ • Covers risk of buyer default due to political or commercial events • Suitable for exporters who sell capital items or contract services of $1m+ • Enables exporters to offer extended repayment terms to buyers • Exporters can receive up front payment from the bank • NZECO works in ‘teaming approach’ with exporter and their financier

5. Short term EXPORT CREDIT GUARANTEE • Announced 4th February 2009 in response to market • Temporary measure – up to 2.5 years • Offers short term trade credit insurance: less than 360 days • Covers risk of creditworthy buyers default due to political or commercial events • For exporters who have had limits on buyers reduced or removed or are unable to get cover. Enables banks to confirm letters of credit

6. CONTRACT BOND GUARANTEE • Guarantee from NZECO to bank to support issuance of bond(s) to overseas buyer • For exporters that lack sufficient security to provide the bond(s) in addition to working capital required • Exporter must show managerial, technical and financial capabilities to perform contract • Enables exporters to secure additional or larger contracts

7. WORKING CAPITAL GUARANTEE • Guarantee from NZECO to bank to allow them to extend credit to exporters who are at their bank lending limits • Banks determine eligibility amongst their client base • Suitable for exporters that lack sufficient security to finance working capital costs associated with unexpected orders or costs • Short term guarantee – generally up to 12 months

8. US SURETY BOND GUARANTEE • Enables NZ exporters to secure contracts with US State, Federal or municipal buyers that require 100% surety bonds • Typically infrastructure type work • Exporters must show managerial, technical and financial capabilities to perform contract

9. Contact NZECO to talk one on one Approach us to discuss your sales pipeline, or opportunities and issues. • Chris Chapman 04 917 6004 chris.chapman@treasury.govt.nz • Tim Robertson 04 917 6080 tim.robertson@treasury.govt.nz • General Line 04 917 6060