Buyer financing arranged through cooperation between export credit agencies
The arrangement of financing plays an increasingly important role in export trade negotiations, and this trend has gained strength in recent years. Finnvera facilitated Nokia’s telecommunications equipment deliveries to Verizon, one of the leading teleoperators in the world, by providing financing and and guarantee. In this major transaction, the share of Finnvera’s guarantee and financing is USD 1.5 billion, or roughly EUR 1.3 billion. Targeted at North American operations, financing is a result of cooperation between export credit agencies: the Canadian export credit agency Export Development Canada (EDC) also took part in the arrangement of financing.
This financing arrangement carried out jointly by export credit agencies is the first of its kind.
“Verizon is one of Nokia’s leading customers for all major technologies, products and services, and we are pleased to have been able contribute to the close Nokia-Verizon relationship with this landmark Export Credit Financing, which was supported by Nokia’s ECA partners Finnvera and EDC,” says Nokia’s Lenny Floria, Head of Regional Treasury & Structured Finance, Americas.
The largest telecom sector deal where Finnvera has participated in financing
The more difficult and more competitive the market an enterprise strives to enter, the more probable it is that the buyer sees financing as a competitive edge.
As an export credit agency, it is Finnvera’s task to improve the chances of Finnish export companies on the market. What was exceptional for Finnvera in this deal was its size. This is the largest telecom sector deal in which Finnvera has been involved.
“This demonstrated that with financing and guarantees, we can promote Finnish companies’ export activities. Even when the buyer is a global company, an export credit agency may play an important role in financing as major corporations aim to seek financing in a diversified manner from various sources,” says Antti Saviaho, Senior Adviser at Finnvera.
Finnvera provided Deutsche Bank, the bank that arranged the financing, with a guarantee. The buyer credit was financed by Finnvera’s subsidiary Finnish Export Credit Ltd.
“For Finnvera, this is a normal financing arrangement that is based, like other major financing transactions, on careful analysis, risk assessment and self-sustainability, which is a key guiding factor in Finnvera’s operations. Finnvera does not hand out subsidies but instead covers its expenses with income received from customers,” notes Jussi Haarasilta, Executive Vice President at Finnvera.
Telecommunications is one of the main export sectors in Finland
Due to increasing demand, the ceilings of Finnvera’s export credits and export credit guarantees were raised with legislative amendments twice during 2016. On the basis of the current year’s figures, the increased authorisations were truly needed. The Verizon deal is a good and large-scale example of how Finnvera uses its increased authorisations to promote the Finnish export sector.
As is typical of export credit agencies in general, Finnvera’s export financing focuses especially on three sectors: telecommunications, shipping and shipbuilding industry, and forest industry.
Jussi Haarasilta, Executive Vice President, Finnvera, +358 50 346 9537
Antti Saviaho, Senior Adviser, Finnvera, +358 50 468 4478