Canadian companies selling goods or services to regional or municipal governments around the world can benefit from an agreement between Export Development Canada (EDC) and Standard & Poor’s Ratings Services (S&P).
Under the agreement, S&P will provide EDC with a transaction specific credit assessment of potential regional or municipal governments who are interested in borrowing from EDC but are not currently rated by a major credit rating agency. Relying on S&P’s expertise as a world-leading credit rating agency, this valuable tool will allow EDC to assess the risks on specific potential transactions and determine whether it can lend to a non-rated foreign regional or municipal government that is buying Canadian goods and services. EDC will be focusing the use of this new capability to support transactions valued at up to US US$5mn.
“This agreement will create new opportunities for Canadian companies, particularly smaller firms that supply goods and services that regional and municipal governments need,” says Ron Dahms, EDC senior vice-president, business development. “We believe there is significant business potential as the procurement requirements of most municipal governments, such as water treatment and other services, are areas where Canadian companies excel.”
In the past, EDC often relied on guarantees from the central government in each country before agreeing to provide financing for projects sponsored by sub-national governments. With a general shift of responsibilities from central to regional and municipal governments in many countries, central governments are less inclined to provide sovereign guarantees. As many regional and municipal governments do not have recognized credit ratings, EDC’s ability to rely on S&P transaction specific credit assessments will provide EDC with the capability of responding to the needs of sub-national governments throughout the world.
EDC provides trade finance and risk management services to Canadian exporters and investors in up to 200 markets. Founded in 1944, EDC is a Crown corporation that operates as a commercial financial institution.