Through the Documentary Credit Insurance Open Policy, Cesce provides coverage against the risks inherent to the confirmation of a documentary credit issued by foreign entities included in the policy. 

It also covers the risks of credits issued directly by the insured party by order of these foreign financial institutions.             

The credits must be used for the payment of Spanish export transactions.      

Who is the insured party? 

The Insured Party is the Bank that grants the confirmation of the documentary credits or that issues them directly by order of the foreign financial institution. 

Commercial risks:

Non-payment of the credit due to insolvency in fact (prolonged default) or due to a statutory filing in law (bankruptcy, suspension of payments, etc.) of the foreign bank (debtor) provided that it is a private entity.

Political risks:

• Non-payment by the foreign bank if it is a public entity
• Non-payment by the foreign bank (public or private) or lack of transfer or convertibility due to situations of political violence, catastrophic events, serious economic difficulties abroad, expropriation, nationalisation of the debtor or guarantors, measures adopted by the Spanish government or by a foreign government, etc. 

Eligible amounts in Cesce coverages on behalf of the State

Transactions with a payment term of two years or more

• The buyer is required to make an advance payment of at least 15% of the Exported Value (OECD Arrangement).
• Local Costs may not exceed 50% [40% in Category I countries] of the Exported Value (OECD Arrangement).
• The domestic content included in the contract must constitute at least 30% of the credit covered by Cesce in operations in countries in groups 0 to 4, 40% in countries in groups 5 to 7 and at least 20% in green operations or with SME exporters (Domestic Content Standard).

Transactions with a payment term of under two years

• The OECD Arrangement does not apply to these transactions, and therefore neither do the advance payment or Local Costs rules. Only the minimum national content requirement described above applies to these transactions..

Don’t stop bringing us your transactions. For transactions in which the established limits are exceeded based on the Spanish content, Cesce will look for the most appropriate structure to provide a solution to your financing or coverage needs, through cooperation with other ECAs, with private insurers or multilateral institutions.

How is the insured credit limit determined?

When applying for insurance, the Financial Institution informs Cesce of the total amount of documentary credits issued and the issuing entities in a given country that it wishes to include in the policy.

Once accepted by Cesce, the Limit of Insured Credits is set as a maximum figure. Therefore, as the Documentary Credits are reimbursed, the Insured Party can request the inclusion of new Documentary Credits in the coverage, provided that this limit is not exceeded.

Cesce sets the price according to the individual characteristics of each transaction. 

The price is determined by the following elements 
•    The risk rating of the export destination country
•    The creditworthiness of the bank issuing the documentary credit (debtor)
•    The term of the insurance policy

Ask Cesce about the conditions and price of the insurance policy when you identify a possible sale and purchase transaction.

Cesce signs an annual open policy per country with each Insured Party, which establishes a credit limit and lists the eligible banks. 

Under this policy, the credits issued by the Insured Party are charged, provided that the amounts fall within the approved limits and comply with the characteristics defined in the policy.

Prior to issuing an open policy, Cesce analyses the country risk and solvency of each of the banks to be included in the policy.

If you are interested, please fill in and email the application form to  cuentadelestado@cesce.es.   

If you have any questions, please call +34 91 193 19 99 or send us your details, and we will contact you.