KUKE’s guarantees provide new business opportunities for Polish exporters
Winning a contract for supplying equipment, technological lines or performing construction works for a foreign buyer requires presenting a guarantee. Solutions from the new system of support for exporters, which is being finalised by KUKE, allow Polish companies to effectively compete for orders all over the world. Last year, the guarantees issued by KUKE covered export projects worth over PLN 5 billion.
It was not only the pandemic and its consequences for the global economy that made export business exceptionally difficult last year. Apart from new types of insurance protecting export receivables, KUKE adapted its offer of contractual guarantees granted with the support of the State Treasury to the changed market conditions. The related procedures and documentary requirements have been simplified, the scope of goods and services covered, and the possibilities of their use have been significantly expanded. Using KUKE guarantees strengthens exporters’ financial capacity, positively influencing their relations with financing banks and enabling them to significantly increase the scale of their operations.
The most frequently issued contract guarantees include performance bonds, warranty bonds and advance payment bonds. Several hundred Polish companies have benefitted from guarantees issued by KUKE - from small companies, acquiring guarantees for several thousand Euros, to large enterprises, where the guarantee amount reached several hundred million Euros. KUKE cooperates with entities from various industries, including energy, transport, shipbuilding, and construction.
KUKE guarantees bring measurable benefits to the exporter as well as to the financing bank. The latter, using KUKE's counter-guarantee, which secures up to 80 percent of the assumed liability, can reduce its risk of a single guarantee to as little as 20 percent, or, while maintaining the original level of risk, can increase its limit per exporter fivefold. As a result, the exporter is able to raise further financing for its development. This solution extends the financial potential of all parties involved.
In 2020, KUKE supported 62 projects worth more than PLN 5 billion implemented by Polish entrepreneurs outside our country, either by issuing direct guarantees or counter-guarantees for guarantees issued by banks. The total amount of guarantees issued has been growing rapidly in recent years. In 2019, it amounted to PLN 395 million and a year later - despite the pandemic – it increased to PLN 460 million. The export guarantee portfolio has for years been dominated by guarantees granted to the shipbuilding industry, which boasts contracts in such demanding markets as Norway, France, and Canada. Other key sectors which use the collateral offered by KUKE when securing contracts include construction and means of transport.
KUKE will in the coming period introduce further financial solutions under the new export support system, including, among others, guarantees for financing investment projects in Poland for exporters, guarantees for repayment of working capital credits and insurance of repayment of credits for takeovers or acquisitions of enterprises abroad, cooperating with CMS law firm in the area of documentation for clients.