Norway's Exportfinans winds down
Following Moody's seven-notch downgrade of Norway’s Exportfinans, its largest owners and the Norwegian government have decided to wind down the company.
Eksportfinans, which helps overseas investors to buy Norwegian goods, was downgraded due to the Norwegian government’s decision to take control of government subsidised loans.
Eksportfinans credit and debt ratings were downgraded by Moody’s from Aa3 to Ba1, while the subordinated debt and hybrid ratings were also downgraded to Ba2 from A1 and B1 from A2, respectively. The short-term ratings were downgraded to not prime from prime-1 and all of the long-term ratings remain on review for further downgrade.
Commenting in a press release, Moody’s says: “The government considers that Eksportfinans lacks the capacity to provide a relevant service to the Norwegian export finance industry, which is skewed toward industries such as shipping, energy and other industries, which often require large loans. As a result, the government has decided to assume responsibility of Eksportfinans's future lending obligations under the 108-scheme.”
From now on the company will not be issuing new loans, and instead Norway’s government will manage an interim financing scheme, which is currently being presented to the Norwegian parliament with a proposed loan commitment of NOK 30bn (US$5bn).
The permanent organisation, expected to be in place by July 1, 2012, will provide subsidised fixed-interest (CIRR) loans, currently known as the 108 scheme.
Commenting on the matter, Norway’s prime minister Jens Stoltenberg says: “The Government intends to establish a state-funded scheme for export credit financing for the Norwegian export industry. The purpose is to provide financing that will ensure competitive conditions for Norwegian exporters.”
However, Exportfinans will continue to manage the run-off portfolio, and its existing loan book, which is fully supported by government guarantees (42.3%) or bank guarantees (57.7%) will not be affected by recent developments.
The company’s shareholding owners include DNB Bank, with a 40.0% ownership share, Nordea Bank Norge with 23.21%, the Norwegian Government with 15% and Danske Bank with 8.09%.
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