Country premium groups

The categorisation of countries into premium groups 0 - 7 forms the basis for calculating NZEC's premium for political risk cover. A country rated 0 represents the lowest risk category, while 7 represents very high risk.

Political risk relates to a country's lack of foreign exchange - and therefore its ability to service its external debt - as well as the risks of losses arising from war, civil war, currency inconvertibility, imports or export prohibition.

Period of cover

OECD consensus arrangement

Under the OECD Consensus Arrangement (Arrangement on Guidelines for Officially Supported Export Credits) the maximum period of export credit cover for 'Category 1' (the richer) countries is 5 years with a possible extension to 8.5 years after prior notification in the OECD. The maximum term for countries in 'Category 2' is 10 years.

Ship building and aircraft purchases are covered by special rules with maximum repayment terms ranging between 5 to 12 years. The maximum period of credit for project finance is 14 years, while export credit cover for renewable energy and water projects has a maximum term of 15 years.

However, the specific period of cover offered by NZEC will be influenced by factors such as the level of credit offered to the international buyer, the assessed degree of political risk, and NZEC's National Interest criteria.

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