EKN: Nimble at ninety
There has been much to celebrate in what has been another record year for EKN at its 90th birthday in a venue that provided plenty of metaphors for the themes of transition and transformation for the ‘wise old lady’ of the Swedish export industry.
Sweden’s export credit agency EKN celebrated its 90th birthday [and Cinnamon Bun Day] on 4 October in a venue that had been Stockholm’s oldest circus (Cirkus). Sweet treats, panel discussions with key corporates and the trade minister and music, all in the big circus tent. Anna-Karin Jatko, EKN's director general, was the ‘ringmaster’ for the occasion, capturing the attention of the audience of exporting companies, banks and Team Sweden (as the EKN and Swedish Export Credit Corporation, SEK, respectively Sweden’s guarantee and funding partnership, is known) with a story of transformation and transition.
“A lot of institutions like to characterise themselves as a ‘grande dame’,” says Jatko. “But I see us as both a nice old lady with all her experience, but also an agile teenager, a 19, not 90, year old.”
The transformation has been marked. In 1933 EKN provided guarantees with a total limit of just SEK75 million ($6.9 million) reaching 21 countries. At the end of August 2023 the agency provided a record SEK76 trillion in cover to support exporters to 140 countries.
At the outset, EKN emerged from a world characterised by the Great Depression where international trade had shrunk. It supported exports of steel from companies such as Uddeholm and Sandviken Jernverk that went to eastern Europe, engines from Bolinder-Munktell went to Argentina and ball bearings from SKF “rolled out” all over the world. Some of those companies are still EKN clients. Bolinder-Munktell is now better known as Volvo Construction Equipment and Sandviken Jernverk as Sandvik.
And now EKN supports exports from cars and construction to pulp and paper, power transmission, defence and mining and telecoms to medtech.
“Today there are more risks interacting than ever before: geopolitical, economic, climate – and export credit guarantees are more in demand than ever,” says Jatko, referring to the “high wire” of risk.
The evolution of the risk landscape, and the changes in political and commercial risks, mean that more than 70% of EKN’s portfolio is now coverage of commercial risks, where it had been more than 70% sovereign risk coverage in the early days.
Guarantee products have changed, and most recently, EKN has been rolling out working capital guarantees for fast growing tech companies and green iterations of its guarantee products and a new raw materials guarantee to help secure supply chains. Around half of the number of transactions EKN covers are related to small and medium sized enterprise (SME) business. That’s not surprising when nearly 40% of Sweden’s exporters are SMEs, and more when SMEs that are sub-suppliers to large exporting companies are taken into account.
Jatko highlighted the role of partnerships to boost international trade, most closely with its other Team Sweden member SEK (emphasising the “Team Sweden spirit”), but also with other ECAs. EKN has co-financing agreements with 22 countries, recently signing a co-financing agreement with US Exim in June.
Fika and cinnamon buns, and discussion
Johan Forssell, Minister for International Development Cooperation and Foreign Trade, noted the coincidence of the birthday celebrations with some very Swedish traditions, including cinnamon bun day, which had been combined with a Fika (a traditional hot drink break) [and international vodka day!] and set the context for Swedish innovation and Sweden’s brand as a country.
Forssell highlighted the importance of foreign trade to an “extremely trade-dependent country”. He also noted Sweden is on top of innovation indices (currently second to Switzerland). “It’s not enough to innovate, smart solutions must be commercialised,” he says.
Special export guarantees to Ukraine will be provided from EKN, starting 1 January 2024. Forssell pointed out that SEK330 million of export credit guarantees would also be provided from the foreign aid budget, which is “a new way of helping given the synergies of development of corporates and foreign trade under a rules-based system.”
Companies using EKN support
Representatives from Ericsson, Alstom, Boule Diagnostics and Cinis Fertilizer, discussed their challenges and opportunities from Swedish technologies, amid climate finance, energy transition and sustainability concerns, and their use of export finance and guarantees from EKN.
Carl Mellander, CFO of Ericsson, which operates in 180 countries and has used some $12 billion of EKN guarantees in the past five years, says the company has sustainability embedded in its business and that the telecoms the company enables is a platform for innovation in other companies to improve sustainability and digitisation. He underlined his desire for the need for free and open trade and the continued need for a level playing field in terms of export subsidies globally.
Maria Wedenby Ahlberg from Volvo Group showcased the logistics from Volvo buses which have been helping cities in emerging markets with decarbonisation efforts via electric buses with Bus Rapid Transit (BRT) guarantees from EKN. Maria Signal Martebo, managing director of Alstom Sweden, values the support of EKN’s triple-A rating as a “key aspect in some markets that are difficult to reach,” works with a different portfolio of agencies, and also supports an innovation hub base in Sweden and zero carbon projects.
Boule Diagnostics’ CEO Jesper Söderqvist uses EKN green facilities to support its debt financing. Medtech typically runs in three to five year cycles for financing, he says. The company is concerned about increasing protectionism in global markets, particularly in India, and about foreign exchange risks.
Cinis Fertilizer’s CEO and founder, Jakob Liedberg, characterises the company as the “baby, not the wise old lady” in the discussion. The sustainable mineral fertiliser company got a green credit of SEK700 million from Nordea and SEK, backed by an 80% cover from EKN, to build the first plant. Cinis Fertilizer has signed an offtake agreement with a Dutch wholesaler of fertiliser to buy all of its production from the first two plants it will build (it has also managed an IPO). It recently ‘topped out’ its first plant. It will be cooperating with battery producer Northvolt to take its waste product to produce green fertiliser. By 2030, the company plans to have six facilities producing a total of around 1.5 million tonnes of fossil-free mineral fertiliser.
The show goes on, it must go on
In sum, according to Jatko, EKN’s show goes on, it must go on. “Working with global trade and financing means being on the high wire in the circus, taking risks. For that you need experience and knowledge.”
Watch out for TXF's interview with EKN's director general Anna-Karin Jatko, to be published soon as part of TXF’s Keynote series talking to leading players in export and trade finance, which will go into more depth about EKN’s strategy.