A number of Sovereign's more notable transactions with Export Credit Agencies over the past several years include:
Supporting EDC in Argentina on the Veladero Mining Project
- Sovereign’s most significant ECA deal of the year was our providing of reinsurance support for EDC (Export Development Canada) on the Veladero gold mining project in Argentina. In addition to their role as a direct lender, EDC provided a separate commercial banking syndication with $110 million in PRI coverage, which was a major factor in successfully attracting commercial bank financing to the project. Sovereign’s 9-year reinsurance contributed greatly to the amount of PRI capacity that EDC was able to make available to the commercial banks. This was by far the largest and longest tenor for an ECA/commercial bank and PRI-structured project finance transaction in Argentina since the country’s default in 2002. The project is located in the province of San Juan and involves Minera Argentina Gold (Magsa), a 100% owned subsidiary of Barrick Gold Corporation.
- Working together with XL Capital's monoline group, XL Capital Assurance (XLCA), Sovereign was able to provide EKN, the Swedish ECA, with a $231 million, 5-year comprehensive credit and political risk wrap for EKN's exposure to a large Mexican industrial group. By combining a political risk insurance policy with a credit wrap from a AAA-rated monoline, Sovereign was able to help EKN better balance its global exposure portfolio by transferring both its credit and political risk exposures in one of this agency's most active markets;
- Sovereign works very closely with the Export Development Corporation (EDC), Canada's national export credit agency. During 2001, we supported EDC on four projects that were located in Tanzania, Colombia, the Kyrgyz Republic, and Mexico. Our reinsurance for EDC in Mexico was structured as a 15-year, $52.5 million policy covering the financing of a power project.
- Sovereign underwrote a 'country-specific excess of loss' reinsurance policy for Finnvera, the Finnish national export credit agency. Finnvera was seeking a solution to its high country risk concentrations in the Philippines, a key export market for Finland's telecommunications manufacturers. Sovereign was able to design a $100 million excess of loss reinsurance solution which covers Finnvera for its exposure under a portfolio of insurance contracts issued to various commercial banks for their loans to two mobile phone operators in the Philippines. This reinsurance solution from Sovereign enabled Finnvera to continue supporting Finnish manufacturing exports to the Philippines.
- Sovereign completed a country-specific reinsurance treaty with COFACE, the French national export credit and investment insurance agency in 1998. COFACE was seeking to better balance its global portfolio by finding a risk sharing partner for COFACE's largest single country exposure, which was in China. Most of COFACE's exposure was in the form of investment insurance on French equity investments in China. Sovereign's reinsurance support provided up to $70 million of capacity to COFACE for a 10-year tenor. This reinsurance treaty enabled COFACE to transfer exposures from its largest single country of concentration and achieve a more evenly balanced global portfolio.
(Click here for an explanation of Sovereign's relationships with Export Credit Agencies)
