Australian export credit agency Export Finance and Insurance Corporation (Efic) has provided GP Graders Pty Ltd’s bank with a documentary credit guarantee for the export of fruit grading equipment to Alara Agri Business in Turkey.
“Without Efic’s assistance in providing finance to Alara the contract would not have eventuated,” says Stuart Payne, director for Victoria-based GP Graders, Australia’s largest designer and manufacturer of produce handling equipment.
“Our competition during the negotiation was a US-based firm which had offered the buyer an export finance package in the past through the Export-Import Bank of the United States, the US export credit agency,” explains Payne. Alara favoured our offer, but it was contingent on the provision of finance and this is where Efic’s documentary credit guarantee played a crucial part.”
Bopha Ammann, associate director in structured trade and project finance says, “Financing for smaller export contracts can be expensive. A documentary credit guarantee can be a cost effective way for an SME exporter to source financing for their buyer.”
Under Efic’s documentary credit guarantee facility, a bank confirms an irrevocable documentary credit (IDC) and provides without-recourse trade facilities to an Australian exporter. Efic guarantees payment to the confirming bank of the principal and interest payment obligations of the bank issuing the IDC.