“We hope that if you start tomorrow with a participation agreement between you and another party, you will view the new document as a document with which you can begin your discussions,” Geoff Wynne, a partner at Sullivan & Worcester, said at the ITFA`s annual conference in Cape Town last week. Export credit insurance financing is an insurance credit facility granted by a lender to an exporter and intended to protect the exporter against the risk of non-payment by a foreign importer. Export credit insurance can be short-term or long-term. This financing facility may be transferred to a participant through a framework participation contract. Uncovered participation is one in which the participant finances the borrower only when the original lender requests or orders the participant to make a payment to the borrower. A guarantee is used to finance imports and is a perfect instrument to protect importers and exporters in international trade. A guarantee offers a promise of performance and payment to an exporter in international trade. A lender that has provided a bank guarantee to a borrower may sell its shares in that credit facility to a participant and the transfer of that interest is ensured by a framework participation agreement. Guarantees are mainly used for uncovered risk-taking.
On the other hand, when syndicating credit, a borrower concludes a single credit agreement with a group of lenders. This individual credit agreement covers all credit facilities made available to the borrower by the various lenders. Each of the lenders in a syndicated loan has a direct legal and contractual relationship with the borrower. However, in most cases, one of the lenders may act as an agent on behalf of the various lenders who have granted credit to the borrower. Sometimes there may be more than one agent who plays a particular role in the credit agreement, for example.B. one agent could be entrusted with administrative functions related to the credit facility and another agent would be responsible for the obligation to securitize the loan and take guarantees on behalf of the other lenders. Typically, in the case of a syndicated loan, the administrative officer is responsible for managing the loan on behalf of the other lenders, including managing communication between the borrower and lenders and paying the loan to the borrower. . .