Danish export credit agency EKF has insured a DKr10bn (US$1.7bn) export loan provided by Denmark’s largest pension fund, PFA Pension.

The ECA says the innovative partnership will give more flexibility to long-term project financing such as wind farms, at a time when banks are reluctant to take risks.

An EKF spokesperson tells GTR: “For large, long-term (tenors of 15-18 years) projects, funding can be very difficult to obtain at the moment. Funding may not be available on attractive terms; or perhaps not available at all.

“The pension funds prefer relatively large (more than DKr250mn [US$42.3mn]) projects with a stable cash flow over a long period. This is what fits their investment profile best. A wind farm, for example, matches this perfectly.”

The ECA predicts that this type of partnership will become more and more common as the export finance industry looks for long-term financing solutions in difficult times, adding that other countries are working on similar things.

“Other countries in Europe have seen the need to come up with different export finance solutions, and the European Commission and EIB’s bond pilot project is also an attempt to involve pension funds,” says the EKF spokesperson.

Although loans are not limited to these sectors, EKF expects most of PFA’s funding to go to the wind and oil and gas sectors due to Denmark’s strength in these sectors.

“Denmark is a world leader in wind technology with companies such as Vestas, Siemens Wind power and a host of other companies. NKT Flexibles for example is an important supplier to the oil industry,” they add.

The wind sector already represents 50% of EKF’s engagement in export finance.

Henrik Heideby, Group CEO and President of PFA Pension, says the partnership will provide its customers with sound returns on their investments while promoting growth and creating jobs in the Danish private sector. “PFA Pension wishes to make an active contribution to this process,” he adds.

According to EKF, PFA’s loan will increase Danish exporters’ chances of winning new orders. The ECA helped secure loans worth over DKr5bn (US$845mn) in the second half of 2011, which it says proves that there is strong demand for Danish products across the globe.