expertise in trade credit insurance About Credendo > European - - PowerPoint PPT Presentation

Almost 100 years of expertise in trade credit insurance

About Credendo

> European trade credit insurance group > Covers commercial and political risks > Active in all segments of trade credit insurance

> Present in 14 countries in Europe

Our mission

Our mission is to support trade relations Credendo provides tailor-made solutions of 1. Insurance 2. Guarantees 3. Bonding (Surety) 4. Financing 5. Reinsurance related to domestic and international trade transactions or investments abroad We protect: > Companies > Banks > Insurance undertakings TURNING UNCERTAINTIES INTO OPPORTUNITIES

Our values

1 Customer intimacy

You get bespoke solutions

2 Respect

You can trust us

3 Reliability

You can count on us

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Credendo’s Corporate Sustainability Policy: > integrity > corporate sustainability > human rights > environmental sustainability > fight against corruption => commitment to the United Nations SDGs

Corporate Social Responsibility

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Credendo in figures

520 employees Values of transactions insured in 2018: 87 billion € 16 offices in 14 European countries

1921

Almost 100 years of experience in credit insurance

Credendo – Export Credit Agency Credendo – Short-Term EU Risks Credendo – Short-Term Non-EU Risks Credendo – Single Risk Credendo – Excess & Surety Credendo – Ingosstrakh Credit Insurance

Headed by the Belgian Export Credit Agency

Geographical spread of risk exposure

4% North America 11% Central & South America 8% Other European countries 32% European Union 29% Asia 1% Oceania 16% Africa

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Tailor- made trade insurance solutions

Trade Credit Insurance Financing Bonding (Surety) Investment Insurance Financial guarantees Reinsurance

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Credendo Export Credit Agency : Funded solutions

Credendo ECA funded solutions

Trade Credit Insurance Financing Bonding (Surety) Investment Insurance Financial guarantees Reinsurance

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Financing Gap

Credendo ECA funded solutions

Source : Euler Hermes

• Forfaiting
• Indirect financing by Credendo
• BE exporter grants deferred payment terms to buyer (= supplier credit)
• Credendo purchases the bills of exchange
• Forfaiting = discounting without recourse
• Buyer Credit Credendo
• Credendo grants a buyer credit directly to the buyer
• Country category 1 to 5

Credendo ECA funded solutions

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• Smaller amounts (max. 8 mio EUR)
• Tenors from 2y to 5y
• Focus on Belgian SME’s
• “Funding gap”

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Forfaiting

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Buyer Credit Credendo

“The Great Lockdown”: Credendo ECA support mechanisms

• Credendo Bridge Guarantee
• Reinsurance program

Helping exporters overcome COVID-19 crisis: Credendo ECA’s Bridge Guarantee

Credendo Bridge Guarantee

Trade Credit Insurance Financing Bonding (Surety) Investment Insurance Financial guarantees Reinsurance

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Credendo Bridge Guarantee

Background

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• Exports : >85% of Belgian GDP
• COVID-19 crisis is origin of cash flow problems at Belgian exporting companies
• Restart of Belgian economy and exports require bridge loans by banks

(government initiative)

• Similarities with financial crisis 2008 - 2009 :
• All Belgian companies (not only SME’s): need for new financing/liquidity but

possibly hard to obtain

• Banks: capital restraints hamper capacity to provide required financing/liquidity

Credendo tackles this “hurdle” by risk participating behind the bank: “Credendo bridge guarantee”

> Ensuring that Belgian exporting companies (SME’s in particular) have access to the necessary credit lines they need to finance (“brigde”) their liquidity requirements in Belgium for the next 12 months in order to avoid a systemic crisis in the country > First demand guarantee product offered to financial institutions operating in Belgium, covering up to 80% or EUR 10 M of the credit risk related to new loans > Guaranteed loans will finance the working capital and investment needs of the borrower > No additional cost for borrowers and immediate positive impact on banks’ capital requirements > Falls under existing framework agreement with the banks > Enhancement of the EUR 50 Bn Belgian State Guarantee scheme (Royal Decree of 14 April 2020)

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Credendo Bridge Guarantee

Rationale

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Credendo Bridge Guarantee

CBG and Portfolio Guarantee : key parameters

Feature/scheme Credendo Bridge Guarantee Portfolio Guarantee

Targeted beneficiaries Internationally active companies facing liquidity issues due to COVID-19 Broader scope than the CBG, including, for instance, ‘independent workers’ Approval process Case-by-case approval: The CBG only applies to qualifying credits under the Portfolio Guarantee and to borrowers fulfilling Credendo’s requirements Automatic approval: The Portfolio Guarantee applies automatically to all qualifying credits Risks covered Non-payment under a single Credit Agreement Final loss under a portfolio

• f

qualifying Credit Agreements Type of cover First-demand guarantee Guarantee covering the remaining loss post enforcement of all sureties and guaranties available Guaranteed rate Up to 80% (min. 20%) Specific per tranche depending on the final loss recorded in the portfolio

• f qualifying credits

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Maximum amount of the CBG :

• turnover of the SME :

€ 45mio for the year 2019

• Equity position of the borrower :

€ 10mio as of 31/12/2019

• Amount of the bridge loan :

€ 4 mio The CBG amount would be the lesser of :

• € 10mio;
• 80% of € 4mio = € 3,2mio
• 30% of the borrower’s equity on 31/12/2019 = € 3mio

The CBG amount would thus be limited to € 3mio, which is a 75% guarantee.

Credendo Bridge Guarantee

Example

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Credendo Bridge Guarantee

CBG procedure

Helping the insurance sector

• vercome COVID-19 crisis:

Credendo ECA’s reinsurance program

Credendo State reinsurance program

Trade Credit Insurance Financing Bonding (Surety) Investment Insurance Financial guarantees Reinsurance

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Credendo State reinsurance program

Background

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• Exports : >85% of Belgian GDP
• Short-term private credit insurance (<2y payment terms) : € 57bn outstanding credit

limits on behalf of Belgian exporters

• EC: “imminent insufficiency of private insurance capacity for exports to all countries” …
• … while demand for insurance will significantly rise as a result of the current crisis.
• Normally: massive suspension of credit limits by private credit insurance companies
• European Commission agreed on State Aid Temporary Framework to support the

economy in the context of the COVID-19 outbreak (19 March 2020) : all countries are non-marketable

• Several other EU-27 countries launching support programs (Germany, The Netherlands,

France, …) for national private credit insurance sector

• Under aegis of NBB, negotiations start with Belgian State, Credendo ECA, Assuralia and

private credit insurers (Atradius, Euler-Hermes, Credendo STN, Credendo XS and Coface)

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• Eligible for Belgian private insurance companies providing short-term commercial credit

insurances (listed before)

• MoU : mitigate the risk of lack of credit insurance for insured companies located in

Belgium for their commercial transactions with buyers (debtors) based both in Belgium and abroad

• The credit insurers commit to keep the credit limits actually used in the 12 months

preceding 1 March 2020 as intact as possible until the end of the year 2020.

• Credendo – Export Credit Agency, acting on behalf of the State, will be the reinsurer
• Agreement on compensation to be borne by the insurers and (progressive) sharing of

premiums between the insurer and Credendo, depending on the loss ratio.

Credendo State reinsurance program

Principles

Credendo = source of information

Credendo Risk App

• Download for free!

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Contact details <first name> <name> <Title> E x.xxxxx@credendo.com T +00 0 000 00 00 M +00 000 000 000

www.credendo.com

Wim Bosman Business Development Specialist T +32 (0)2 788 89 37 M +32 (0)478 631 030 w.bosman@credendo.com

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Country risk analysis:

Côte d’Ivoire & Ghana

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Assess risk of non-payment in trade- or credit transactions due to ‘force majeur’ events like foreign exchange shortage, political unrest, natural disaster or arbitrary government action

> Quantitative models assess solvency/liquidity indicators, political/security situation, investment climate, … > Country classifications determine maximum cover ceiling & risk premium > Credendo has significant exposure on Ghana & Côte d’Ivoire

GHANA COTE D’IVOIRE

Categories 1-7 reflect intensity of Political risk

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Country-level risk analysis

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In Africa, the virus is expected to smolder for an extended period rather than the exponential increases witnessed elsewhere… Will Africa be the last region to gain control over covid-19?

Covid-19 shock

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Sub-Saharan Africa

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Socio/economic impact of global lockdown & containment measures

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Sub-Saharan Africa: covid-19 shock

> Sharp fall economic activity  African trade to drop by at least 35% in 2020 > Current account balances will deteriorate: – lower commodity prices (highly resource dependent region) – sudden stop in tourism – drop in remittances > Pressure on foreign exchange reserves & exchange rates > Rising inflation > High fiscal spending needs: deterioration public finances Risk for food insecurity Higher risk for public debt crises & sovereign defaults

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Region in recession for 1st time in 25 years (-3,2% in 2020)

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Sub-Saharan Africa: covid-19 shock

• 11
• 6
• 1

4 9

World Bank economic prospects: GDP growth (%)

2019e 2020f 2021f

34

G20 DSSI for African Low-Income Countries (Source: World Bank)

International assistance essential to address large financing needs

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Sub-Saharan Africa

African countries receiving financial assistance and debt service relief from the IMF (Source: IMF)

Côte d’Ivoire: RCF (USD 295,4 mio) & RFI (USD 590,8 mio) Ghana: RCF (USD 1000 million)

Country DSSI Participation requested? Potential DSSI Savings (in USD millions) Potential DSSI Savings (in % of 2019 GDP) Angola Yes $2645.6 3.1% Benin No $13.7 0.1% Burkina Faso Yes $23.3 0.2% Burundi No $3.9 0.1% Cabo Verde Yes $14.9 0.7% Cameroon Yes $276.1 0.7% Central African Republic Yes $6.3 0.3% Chad Yes $61.0 0.5% Comoros Yes $2.3 0.2% Democratic Republic of the Congo Yes $104.4 0.2% Republic of Congo Yes $146.2 1.3% Côte d'Ivoire Yes $231.3 0.4% Djibouti Yes $59.2 1.6% Ethiopia Yes $511.3 0.5% The Gambia Yes $11.5 0.7% Ghana No $354.1 0.5% Guinea Yes $126.3 0.9% Guinea-Bissau No $0.9 0.1% Kenya No $802.6 0.8% Lesotho No $9.5 0.3% Liberia No $1.8 0.1% Madagascar No $23.9 0.2% Malawi Yes $17.1 0.2% Mali Yes $52.3 0.3% Mauritania Yes $90.0 1.2% Mozambique Yes $292.3 2.0% Niger Yes $25.8 0.2% Nigeria No $107.5 0.0% Rwanda No $12.6 0.1% São Tomé and Príncipe Yes $2.1 0.5% Senegal Yes $131.7 0.6% Sierra Leone Yes $7.0 0.2% Somalia No ... ... South Sudan No ... ... Tanzania Yes $148.9 0.2% Togo Yes $25.8 0.5% Uganda Yes $95.4 0.3% Yemen No $142.7 0.5% Zambia Yes $139.6 0.6%

> One of West Africa’s most stable democracies > Main goods exports (2019) – Gold (23% current account receipts) – Oil (19% current account receipts) – Cocoa products ( 9% current account receipts) > Experienced severe economic headwinds (‘14-’16) > Macro-economic performance improved since ‘17 – Corrective actions under IMF program (Apr ‘15-’19) – Higher oil production spurred growth and export revenues > The Ghana cedi is volatile and to remain under pressure this year > Foreign exchange reserves were at acceptable levels (> 3 months import cover in April 2020)

General features behind risk classifications Country Risk Analysis: Ghana

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• 5

5 10 15

Real GDP growth (%)

Ghana Sub-Saharan Africa

Source: IMF & World Bank

Country Risk Analysis: Ghana Economic & financial impact covid-19

Tumble oil prices, disrupted global trade flows, falling remittances  drop in export- and government revenues Urgent financial needs to deal with crisis  IMF approved $ 1 billion RCF  other sources? Depressed global financial sentiment & conditions  falling capital inflows (FDI & portfolio investments) & rising external interest payments Debt sustainability weakened: jump in external debt to GDP ratio to 56% in 2020 & rising debt servicing costs

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Country Risk Analysis: Ghana

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Public finances – are key weakness – Outsized interest/revenues burden – Weak SOE’s – 9.5% fiscal deficit (2020) – Election cycles challenge fiscal stability (2020 general elections) IMF ‘High risk of debt distress’

OUTLOOK: risks are tilted to the downside

34 36 46 43 50 58 67 55 58 58 63 64 73 17 21 21 15 19 28 35 38 42 40 39 41 41 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Gross public debt (% GDP) Public interest payments (% revenues excl. grants)

Source: IMF report April 2020

> WAEMU member state = ST transfer risk mitigation (CFA franc) > One of Africa’s fastest-growing economies > The world’s largest cocoa exporter > Sustainable public finances

General features behind risk classifications Country Risk Analysis: Côte d’Ivoire

38 AWEX - Beluci presentation 02 07 2020 1,5 1,7 1,9 2,1 2,3 2,5 2,7 2,9 3,1 3,3 3,5 2010M05 2011M01 2011M09 2012M05 2013M01 2013M09 2014M05 2015M01 2015M09 2016M05 2017M01 2017M09 2018M05 2019M01 2019M09 2020M05

Cocoa prices (USD/kg)

Source: World Bank

• 6
• 4
• 2

2 4 6 8 10 12

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Real GDP growth (%)

Côte d'Ivoire Sub-Saharan Africa

Source: IMF & World Bank

Country Risk Analysis: Côte d’Ivoire Economic & financial impact covid-19

Disrupted supply chains and external demand depress agricultural (cocoa) and manufactured exports Urgent financial needs to deal with crisis  IMF approved $ 886 million RCF/RFI  DSSI approved (0.4% GDP)  Other sources? Worsened global financial conditions and investor confidence:  Lower capital inflows (FDI, portfolio inv)  Complicates international refinancing Temporary jump in fiscal deficit (-5.2% GDP) will raise public debt stock to 42% in 2020. Interest burden remains acceptable.

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Country Risk Analysis: Côte d’Ivoire

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OUTLOOK: stable

Exposed to extreme weather conditions Political unrest? (2020 elections) Security risks? Jihadist spillovers from Sahel

Watch!

• Final duration and impact of covid-19 remains uncertain
• External debt stock is getting less concessional (debt service burden is on the rise)
• IMF ‘Moderate risk of debt distress’

Contact details Louise Van Cauwenbergh Country Risk Analyst E l.vancauwenbergh@credendo.com T +32 788 86 62 M +32 488 38 33 96

www.credendo.com

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Turning uncertainties into opportunities