Hermes Cover for Exports to the Middle East Dr. Matthias Koehler Bundesministerium für Wirtschaft und Technologie All rights reserved. Copyright 2008 Euler Hermes Kreditversicherungs-AG and PricewaterhouseCoopers AG WPG. GERMAN NEAR AND MIDDLE EAST CONFERENCE, BERLIN May 24 th, 2011
Hermes Cover for Exports to the Middle East Balancing elevated risks in dynamic markets Agenda 1 Volume covered 2 Cover Policy 3 Recent Events 4 Risks & Experience 5 Project Trends 6 Outlook page 2
Volume covered German Exports, Hermes Cover and Growth in the Middle East 27.500 7,0 EUR m 25.000 22.500 20.000 17.500 15.000 12.500 10.000 7.500 5.000 2.500 0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 weighted regional GDP, % yoy change 2005 2006 2007 2008 2009 2010 2011f Exports Hermes Cover (left scale) Regional Growth (right scale) Source: Federal Statistical Office Germany, Euler Hermes, IMF WEO April 2011 page 3
Volume covered Share of German Exports under Hermes Cover 20 15 in % 10 5 0 2005 2006 2007 2008 2009 2010 Middle East Developing and Emerging Markets Share of Total German Exports page 4
Volume covered in Euro million 1. UAE 2. Oman 3. Saudi Arabia 4. Israel 5. Kuwait 6. Qatar 7. Bahrain 8. Jordan 9. Syria 10. Yemen 66 211 139 199 57 103 13 72 27 22 2 6 9 420 345 447 617 744 1192 2010 2009 1508 page 5
Cover Policy Short Term Credit (up to one year): Open for Cover Limitations only for Lebanon (L/C)and Palestine (only small transactions, private Sector) Medium/ Long Term: Open for Cover Restrictions only Lebanon, Syria (only small transactions), Jordan and Yemen (case by case) Cover for Structured and Project Finance available in most countries Individual Country Cover Policies determined by Sustainable Lending Principles (OECD) for Public Buyers (only Yemen) Country Category (OECD-Category) Possibly by recent events (Bahrain, Syria) Middle East Cover Policy Overall: Few limitations for everyday business as well as large projects page 6
Effects from the Arabellion? Some form of jihad (uprising) in all North African and Middle East countries Germany supports democratic reform in Tunisia and Egypt Imposed sanctions on Libya in line with international resolutions Consistently, Hermes Cover has been granted throughout the largely peaceful transition process in Tunisia and Egypt Whereas Hermes Cover for Libya has been suspended as violence escalates On the basis of a close monitoring of a country s situation: Currently Hermes Cover for projects in Bahrain, Syria and Yemen case by case Cover for regular deliveries on short terms are available for the time being page 7
Recent Events Recent changes: Bahrain: 4 (3 before) Syria: 7 (6 before) OECD Country Risk Category 1 - Not assigned 2-3 - 4-5 - 6-7 - Per 01.04.2011 page 8
Indemnifications Paid 4.000 8.080 3.500 EUR thousand 3.000 2.500 2.000 1.500 1.000 Saudi Arabia Israel Bahrain UAE 500 0 2006 2007 2008 2009 2010 page 9
Project focus in recent years likely to continue? Power generation: Prerequisite for further growth Alternatives to oil and gas grow in importance Waste water treatment and desalination: Caring for a rising population Passenger Aircraft: Competition for new international junctions Cement Production: Limited growth with a shift in demand page 10
Project Trends Israel Oil refinery, container Cranes, textile machines (nonwoven) Jordan Sugar refinery Saudi Arabia Aluminium rolling mill, seamless tube plant, refinery Yemen mobile telecom network, cement mill Iraq Natural gas compressor Kuwait passenger aircraft Oman Combined gas & steam power plants Bahrain Aluminium mill, passenger aircraft, waste water treatment Abu Dhabi, UAE caterpillar and heavyduty cranes, passenger aircraft, Shardja, UAE Freighter aircraft Qatar Tyre recycling, passenger aircraft Dubai, UAE Power generation/ transmissio n/ distribution, desalination plant, city buses, extension of telecom network, passenger aircraft page 11
Outlook: 2011 and beyond 1 st Quarter Figures and Trends New Cover Volume Middle East: EUR 0.4bn (1st quarter 2010: EUR 0.9bn) Usual volatility for a region attracting large projects, but Decline also recognisable in volume of regular deliveries We expect the decline in demand to be temporary as underlying trends are long term: Vertical diversification energy intensive industrialisation Power generation and desalination Extension of international trade and transport links However, escalating internal conflicts could lead to suspenion of cover facilites in some countries page 12
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Thank you for your attention! Dr. Matthias Koehler Bundesministerium für Wirtschaft und Technologie Tel.: 0 30 20 14 75 76 E-Mail: matthias.koehler@bmwi.bund.de Further information is provided under: Export Credit Guarantees: Hotline: +49 (0) 40/88 34-90 00 info@exportkreditgarantien.de Investment Guarantees: Hotline: +49 (0)40 / 88 34-94 51 investitionsgarantien@de.pwc.com www.agaportal.de page 14