European governments are taking steps to inject much-needed capital into Ukraine’s reconstruction efforts, as several export credit agencies (ECAs) widen their risk appetite in the war-torn country.

Last week, the Netherlands announced a €102mn package for Ukraine, which included fresh export credit support and funding to help Kyiv purchase gas and build up reserves ahead of the coming winter.

In total, the deal allocates an additional €60mn in export credits for Ukraine’s reconstruction and will encourage Dutch companies to contribute to projects by covering investment and transaction payment risks.

Support will be provided through the Dutch ECA, Atradius DSB, and doubles the agency’s coverage in Ukraine.

“The country has enormous investments needs in the area of infrastructure, transport, bridges, energy, housing, agriculture, [and] food security,” says Niek van der Beek, deputy head of SMEs and business development at the ECA.

“Our current perception is that private insurance capacity is fairly limited at the moment,” he tells GTR.

Meanwhile, the Swedish government announced last month it would create a special guarantee for exports to Ukraine.

The Swedish agency, EKN, says the scheme is expected to have capacity of SEK333mn (US$30mn) and premiums “will not reflect risk, which is otherwise a requirement according to EKN’s regulation”.

An EKN spokesperson tells GTR that Sweden’s government is still ironing out the details, though the aim is for the guarantee, which could boost construction, infrastructure and transport exports, to be available next year.

If approved, the scheme promises to dramatically boost Sweden’s ECA support in the market. Since February 2022, EKN’s guarantee volumes for Ukraine have amounted to about SEK41mn (US$3.3mn).

Other ECAs are also getting in on the act, such as BpiFrance, which has committed to insure corporate and bank investments in Ukraine for war, credit and political risks and can cover up to 95% of losses.

In a statement, Yulia Svyrydenko, Ukraine’s economy minister, said the move comes on the back of “renewed interest” in Ukraine from France’s private sector. “This decision is a signal to French companies that they can enter the Ukrainian market more actively,” she added.

In late September, Poland’s government formalised an amendment to its law on state-guaranteed export insurance to allow its ECA, Kuke, to provide 100% coverage of investments made by Polish companies in Ukraine.

The developments come just a few months after Ukraine’s central bank lifted restrictions on domestic firms’ repayments on loans backed by foreign ECAs in a bid to attract funding for imports as well as efforts to rebuild the war-torn country.

According to World Bank estimates, Ukraine’s current reconstruction bill is US$350bn, over 1.5 times larger than its GDP in 2021.

In recent months, Kyiv has initiated conversations about how western companies, financiers and insurers can help rebuild Ukrainian roads, bridges and buildings – though private insurance remains limited.

Oleksandr Gryban, Ukraine’s deputy minister of economy, said in a March op-ed – published in Tech EU – that while aid is Ukraine’s main source of foreign capital, Kyiv is keen to create an environment where private investors want to “come, stay and work for the country long-term, rather than depend on financial infusions”.

He touted the need to de-risk private investments in Ukraine and highlighted the role of the World Bank’s Multilateral Investment Guarantee Agency (MIGA), as well as ECA guarantees, in achieving these aims.

MIGA – which provides political risk cover for investments in developing countries – launched its Ukraine Reconstruction and Economy Trust Fund (Sure TF) in February to boost its insurance capacity.

Japan has contributed US$23mn to the Sure fund and several other countries have pledged to donate, GTR understands, though for now the agency is still short of its overall funding target of US$300mn.


The road to Kyiv

There is also a growing push among public and private insurers to cover ships, trucks and trains ferrying goods to and from Ukraine.

In the Black Sea, the Ukrainian government has carved out a temporary corridor to allow commercial vessels to load and export grain from terminals in the region, namely Chornomorsk, Odesa and Pivdennyi.

In late September, London-headquartered broker Miller said it had helped set up a new marine insurance facility for Ukraine exports using the Black Sea passage, covering both the cargo and the ship.

To support its short-term export insurance business, Kuke CEO, Janusz Władyczak says the agency is also developing a reinsurance programme for Poland’s transport sector to deliver goods – by land, sea, air or rail – to importers in Ukraine.

“Since the beginning of the war… only the Ukrainian companies are able to transport the goods, because the private insurance market is not able to insure the transportation means and the cargo [of Polish companies],” he says.

Kuke is seeking to reinsure Polish insurance companies who in turn could provide a contractual clause to their transport clients covering them against losses stemming from war hazards, such as missile strikes.

The Polish agency needs approval from the European Commission for the new programme, which Władyczak hopes could be granted within the coming three to six months – though admits could take longer.

“As far as we know, Kuke is the first to broach this type of subject and so it presents a new type of situation for the Commission,” he says. “In the rebuilding of Ukraine, somebody needs to transport those goods, so there is a clear need to secure the transportation means and the goods themselves,” he adds.

Kuke briefly paused coverage for Ukraine between March and June 2022, but in the past 18 months has covered roughly PLN2bn (US$460mn) worth of exports to the country, insuring trade receivables and bank letters of credit (LCs).

Such support is roughly equivalent to the monthly levels of cover provided before the Ukraine crisis, Władyczak says, while noting the agency has experienced practically zero losses.

Food accounted for 20% of Kuke’s portfolio vis-à-vis Ukraine, plastics around 15%, chemical and construction 10% and metals 6%. Companies from the fuel, pharmaceutical, automotive and clothing sectors also hold a significant share.