The British scheme for its export credit agency (ECA) to guarantee letters of credit (L/Cs) that have been in such short supply during the credit crunch has been delayed.The delay comes as the Export Credit Guarantee Department (ECGD) demonstrates that it is moving firmly into areas previously occupied by commercial lenders who have been unable to provide finance as a result of the credit crunch.

Delays

Under ECGD's L/C scheme, British banks will be certain they will be paid when they issue confirmed L/Cs to British exporters trading with overseas companies on contracts that will be settled within a year.

Such transactions will be guaranteed by ECGD, but we have learnt that the scheme that should have been announced in the next few days has had to be delayed while the banks finalise their systems for the scheme.

Changing times

ECGD, which over recent years has tended to finance mega projects such as dams built by British contractors or aspects of the Airbus aircraft manufacturing business, is now looking at much smaller deals.

In September, for example, the British ECA insured a US$14.4 million contract secured by Cleveland Potash Limited (CPL) with Brazilian fertiliser conglomerate, Fertipar.

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