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28 April 2021

CPRI in trade finance report 2021

Middle East & Africa, Americas, Asia-Pacific, Europe
Managing Editor
TXF Research’s CPRI in trade finance report is both timely and extensive, taking a more forensic look at the health of the private insurance market during the pandemic, as well as the opportunities and challenges ahead.

The credit and political risk insurance (CPRI) market has proved robust in terms of capacity and claims during the economic bulldozer that is the Covid-19 crisis, according to TXF Research’s CPRI in trade finance report. From new clients spawned amid the growing importance of CPRI product suites to a potential uptick in insurance premiums for users of trade, export and project debt, there will be a plethora of opportunities and challenges for brokers and insurers going forward. 

Heightened geopolitical tensions against a fragile global economy mean that corporates across the trade sphere are more focused than ever on the loss potential posed by political and credit risks. Recent events involving the sudden collapse of companies - especially in the Asia-Pacific commodities sector - have underlined the importance of having trade credit protection in place. 

The perpetual state of change over the past year has created challenges to the availability of up-to-date information to identify risk, and how to price that risk, which means underwriters can’t always accurately assess the credit and political risks of an associated project or deal. So calls for greater transparency in trade finance insurance are amplifying, and will continue to against the screams of the imponderable Greensill saga. 

CPRI product offerings have, so far, performed well - but claims have not materialised in the volumes expected at the beginning of the Covid crisis. It is still early days, and as state support unwinds in various markets at different rates, sentiment may change too, as will the need for restructuring. 

Insurance helps mitigate risk and facilitates trade, but that comes at a cost. In the crisis, was it expensive, and was it worth it? Inquiries for credit risks on private obligors, as against, public obligors have been very high over the pandemic. 

With applications for CPRI cover ballooning in the Covid epoch, concerns from market players around potential constraints on capacity and risk appetite are very real. And a claims crisis could still hit. But it is foolhardy to try and predict such a black swan event for the CPRI market. 

Instead, there is another swan on the horizon - a ‘green’ swan - given the stronger focus from investors and lenders on financing the energy transition. And the private insurance market will play a key role in absorbing the residual risk on medium/long-term ECA-backed deals, reinsuring ECAs, and wrapping up project debt, especially in the renewables sector. 

Building back better is the mantra in many markets after the crisis, and the importance of ESG-related finance is increasingly in the spotlight. But the private market will increasingly be called on both to cover and, paradoxically, also to ignore the non-renewables market. It will be an interesting balancing act. 

We’d like to thank the 91 survey respondents, and the 15 interviewees who added context to the survey results, for their time in contributing to the survey and their valuable insights and we’d welcome your feedback so this valuable research can be deepened in the future. 

To buy or find out more about the report please email intelligence@txfmedia.com

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Take a look below at a selection of exclusive subscriber articles published last week

Market welcomes OECD changes to rules on local content
Changes to the rules on local content within ECA-backed export financing is just one of the elements of the OECD Arrangement that many have been asking for. Now an increase in the local content percentage rule looks set to give the export finance community a fillip it has been seeking for a long time....Read on here

TXF Research’s Export Finance Industry Awards 2021
From speedy deal gestations to the calibre of an ECA's product offering, the Export Finance Industry Awards 2021 recognises industry excellence based on the banking and ECA heatmaps produced in TXF Research’s Global Export Finance Industry Report 2021. Find out this year's winners here....Read on here

TXF ECA-backed Deals of the Year results
With numerous deals submitted for the TXF Export Finance ECA-backed Perfect 10 and heavy voting through Tagmydeals.com, the shortlist provided some excellent deals and ultimately there were some hard choices to be made. The overall list of winners is indicative of a very impressive performance from the export finance global community for deals signed in 2020...Read on here 

ChemChina progresses $3.85bn refi amid merger plans
State-owned ChemChina is planning to tap several bilateral loans to refinance the three-year tranche on its...Read on here 

More details on Assembly III construction financing
More details have emerged on the recent construction financing by D E Shaw Renewable Investments (DESRI) of its...Read on here

Recurrent closes on construction financing
Recurrent Energy – via Sunflower County Solar Holdings – has closed on the construction financing for a 100MW solar PV project in...Read on here 

Two GCC issuers out to capital markets
Kuwaiti petchem company Equate - 42.5% owned by Petrochemical Industries Company, which in turn is a subsidiary of state-owned oil company Kuwait Petroleum Company - and Taqa - also known as the Abu Dhabi National Energy Co - are out to the capital markets to tap...Read on here

Krishna joins Baker Botts energy team
Shashank Krishna, previously a partner at McDermott Will & Emery UK, (MWE), has moved to the energy team at Baker Botts and has already started his new role...Read on here 

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