UK Export Finance (UKEF) is retiring a £5bn refinancing facility it introduced in the wake of the global financial crisis, citing low client demand.
The Export Refinancing Facility (ERF) was launched in 2014 after funding challenges and capital requirements regulations triggered by the 2008 financial crisis deterred commercial banks from offering medium- and long-term export finance in US dollars.
The product allowed buyers of UK exports – typically sponsors of large projects – to refinance bank loans of over £50mn by issuing bonds guaranteed by UKEF, the country’s export credit agency.
“We’re always listening to customers and regularly review our products and services to best match their needs,” a UKEF spokesperson tells GTR. “The Export Refinancing Facility was established back in 2014 to help bridge the unique financing challenges of the time.”
“Time has moved on since the financial crisis of 2007/08,” the spokesperson says, adding that the facility had not been used in recent years.
As of June 2016, no guarantees had been issued under the ERF, according to a National Audit Office report at the time.
At its launch, the ERF was welcomed by banking and exporting trade associations, but two UK export finance bankers – one former and one current – tell GTR the product failed to gain traction because it came too late after the financial crisis.
UKEF said at the time that the ERF was needed because European banks were facing shortages of long-term funding in US dollars. Although the dollar crunch had eased by 2014, the agency said “there is a continuing concern that a similar event could occur that will trigger a bank funding crisis. ERF is therefore designed to address past, current and future export finance challenges.”
