Buyer’s Credits Through Sovereign Guarantee

Within the scope of our Buyer's Credits through Sovereign Guarantee Program, we provide buyer’s credit to foreign public institutions planning to import from the Republic of Turkey under sovereign guarantee.

Within the scope of this Program, which is in the form of buyer’s credits, we provide financing to foreign public institutions under the sovereign guarantee in their purchase of Turkish goods.

Scope

We are financing Turkish consumption and capital goods exported from Turkey (those “Origin Country Code” under the Customs Declaration Form of the Republic of Turkey is 052).

For loans whose maturity shorter than 24 months, Turk Eximbank’s financing could be up to 100% of the export contract value of goods exported from Turkey. Yet, in accordance with the OECD Arrangement on Officially Supported Export Credits, for loans whose maturity equal to or more than 24 months, Turk Eximbank’s financing could be up to 85% of the export contract value of goods exported from Turkey. The remaining 15% of export contract value, in this case, shall be covered by the borrower or foreign buyer itself.

Application and evaluation procedure

The official credit application shall be submitted to our Bank by foreign ministry or institution which has the authority to borrow under the sovereign guarantee of its state. Such an application shall cover credit parameters such as requested loan amount, utilization and repayment period, and also enclose the export contract signed by the Turkish exporter and its foreign buyer.

All applications received by us are evaluated within the current limit of foreign banks, in line with the OECD Arrangement on Officially Supported Export Credits and our Bank’s appraisal criteria.

What are the benefits?

  • We are providing alternative financial resources to foreign states in their purchase of Turkish goods.
  • We enable our exporters to offer both products packages and financing packages to their foreign buyers.

What are the conditions?

  • Up on receipt of application from foreign public ministry/institution in low-income countries, we make a detailed assessment in accordance with the OECD "Principles and Guidelines to Promote Sustainable Lending Practices in the Provision of Official Export Credits to Lower Income Countries". The foreign state which would provide its sovereign guarantee is expected to be eligible to borrow on commercial terms [i.e. having non-concessional borrowing limit set by the International Monetary Fund (IMF), and the World Bank].
  • Goods subject to the financing shall be exported from Turkey (certified with an “Origin Country Code” of 052 under the Customs Declaration Form of the Republic of Turkey).

Which costs could occur?

In general, the costs arising from credits allocated throughout the Program, in the form of buyer’s credits, are covered by the borrower itself. Main cost elements:

  • Interest (determined on transaction basis, by taking into account the cost of funding of our Bank.)
  • Risk Premium (flat, collected in line with the OECD Arrangement on Officially Supported Export Credits.)
  • Commission (Management Fee, Commitment Fee).
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Who is Eligible?

Who can apply?

We expect the foreign ministries, institutions, or banks to apply for the loan under the sovereign guarantee of their states.

Which Countries?

The applicant foreign country which would provide its sovereign guarantee is expected to be eligible to borrow on commercial terms [i.e. having non-concessional borrowing limit set by the International Monetary Fund (IMF), and the World Bank]. For detailed information, please refer to the "Sustainable Lending Practices".

How To Do?

Follow the seven-step process from application to loan disbursement to see how it is done:

  1. Get in touch with Turk Eximbank:

    We prefer foreign buyer/borrower to contact with us prior to submission of official application.

  2. The loan application:

    The official credit application shall be submitted to our Bank by foreign ministry or institution which has the authority to borrow under the sovereign guarantee of its state. Such an application shall cover credit parameters such as requested loan amount, utilization and repayment period, and shall also enclose the export contract signed by the Turkish exporter and its foreign buyers.

  3. Financing proposal:

    Following the loan application, Turk Eximbank might prepare an indicative term sheet, outlining key terms and conditions in the financing proposal.

  4. Setting the loan amount:

    Once the foreign applicant accepts the financing proposal, Turk Eximbank initiates the loan allocation procedures.

  5. The facility agreement:

    Facility agreement is drafted to reflect the financial terms and conditions of each loan. Following the conclusion of negotiations between the Borrower and our Bank, the Facility Agreement is signed.

  6. Disbursement:

    Up on submission of utilization request and relevant supporting documents by the borrower, Turk Eximbank makes disbursement directly to the account of exporter and debit the loan account of the borrower in accordance with the terms and conditions of the facility agreement.

  7. Repayment:

    Principal repayments and interest payments are realized by the Borrower in line with the terms and conditions set out in the facility agreement. The principals are repaid in equal, semi-annual instalments throughout the life of the facility. First repayment date can be (a maximum of) 6 months after the weighted average date of shipment or after the commissioning date, if any.

Frequently Asked Questions

Who is eligible to be Borrower?

The Borrower might be a foreign ministry or institution which has the authority to borrow under the sovereign guarantee of its state.

What is the upper limit of financing support?

For loans whose maturity shorter than 24 months, Turk Eximbank’s financing could be up to 100% of the export contract value of goods exported from Turkey. Yet, in accordance with the OECD Arrangement on Officially Supported Export Credits, for loans whose maturity equal to or more than 24 months, Turk Eximbank’s financing could be up to 85% of the export contract value of goods exported from Turkey. The remaining 15% of export contract value, in this case, shall be covered by the borrower or foreign buyer itself.

How Country Limits are determined?

Countries of operation and the limits to be assigned to these countries are determined by the Council of Ministers of the Turkish Government annually. These limits indicate the ceiling of the total risk to be taken in a certain country by International Loans and Medium & Long Term Export Credit Insurance/ Guarantee Programs.

Our Bank determines the total risk amount to be taken in a country by taking into consideration the actual information that may affect the economic and political situation of the country where the project /export transaction shall be realized and the borrower is resident.

For detailed information, please refer to "Country Limits".

What is Risk Premium and how is it calculated?

Risk premium is the flat, non-refundable fee due and payable to our Bank which shall be collected in accordance with the OECD Arrangement on Officially Supported Export Credits.

Please click here to reach the risk premium calculator.

What are the differences between Letters of Intent with and without Financing Conditions?

Depending on the request of the exporter, the letters of intent can be issued in two different forms: with an annexed term sheet indicating the tentative financing terms or without a term sheet.

Letters of intent with a term sheet have a validity period of 3 months and indicates envisaged financing terms and conditions while those without term sheet are valid for 6 months and do not include indicative financial terms and conditions.

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