Credit assessment and documentation

Eksfin assesses and approves the transaction’s credit risk. Such a credit check will include assessment of the debtor (normally the buyer of a Norwegian export product) or guarantor (if a loan is being guaranteed by another a debtor, such as a parent company). If the buyer/debtor is a public sector entity (or the state itself), the assessment of the state will be important.

Eksfin’s credit assessment extends to other elements as well, including more general characteristics of the country in question (its business climate, for example) and the market in which the debtor operates, including opportunities there.

• Eksfin undertakes a thorough assessment of the guarantee recipient’s debt-service capacity. To do so Eksfin employs both credit risk models and cash flow analyses.
• Eksfin’s credit risk models are based on the methodology of a recognised, international rating company. The models contain elements of qualitative and quantitative data, which are weighted differently depending on the model being used.

Eksfin’s evaluation of credit risk involves a financial risk assessment, in which several financial ratios are analysed, and a business risk profile assessment that is predominantly qualitative in nature but can be supported by statistics. In the latter assessment, Eksfin examines both industry and country risk as well as competitive position.

Eksfin has analysts who calculate their own estimates of earnings potential. These figures are used as input when preparing cash flow analyses.

Eksfin assesses country risk where appropriate, and in many cases country risk is a decisive factor in premium calculation. During a country assessment we look at the overall payment risk in the country. The assessment includes economic and political factors that affect whether a country can and will respect its international payment obligations. Such factors may include foreign exchange shortages, war, civil war, expropriation, suspension of payments, transfer barriers or trade restrictions (an import or export ban, for example). Other aspects of a country’s ability to pay, including broad economic developments, are also assessed.