Shopping line cover

Flexible financing for international procurement projects originating in Germany

Higher flexibility for international procurement programmes. More opportunities for German exports.

Shopping line cover is an export credit guarantee provided by the Federal Republic of Germany to secure a financial loan that a bank makes available to a foreign borrower to finance several import transactions. The aim of shopping line cover is to make a positive contribution to Germany as a business location, to support production in Germany and, in particular, to promote small and medium-sized enterprises (SMEs) by facilitating German exporters’ access to international procurement programmes run by foreign companies and by creating targeted incentives to continue sourcing goods and services from German exporters.

Unlike traditional buyer credit guarantees for individual transactions, the Shopping Line enables the financing of a large number of procurements from different exporters within a single financing framework, thereby serving a pooling function. This provides foreign buyers with flexible access to financing, whilst German exporters can benefit from additional business opportunities.

Who might be interested in shopping line cover?

The shopping line cover is aimed at foreign companies with investment-grade credit ratings that regularly purchase goods and services from German exporters and wish to utilise a flexible, long-term financing facility for this purpose. The amount of the Shopping Line is based on past, current and expected future imports from Germany. This is determined on the basis of relevant procurement information, which is submitted and assessed as part of the application process.

How shopping line cover works

The Shopping Line brings together a financing institution, a foreign borrower,
several exporters and the Federal Republic of Germany’s, acting as an
export credit agency, within a joint financing structure.

1. Letter of Interest

The bank or the foreign buyer submits an enquiry and provides information on past, current and planned procurements from Germany. This is followed by a preliminary assessment of eligibility (for cover), creditworthiness and environmental, social and climate aspects. The parties agree on the key commercial and contractual parameters in a term sheet. On the basis of this preliminary assessment and the information provided, the relevant federal ministries agree to issue a non-binding Letter of Interest.

2. Legally binding offer of cover

Following a positive preliminary assessment, the bank submits the application for cover. Once the relevant federal ministries have made their decision, the legally binding cover is granted on the agreed terms.

3. Payout and use

The finance loan will be disbursed in at least two pre-agreed instalments. The borrower will use the funds to finance import transactions with various exporters. At the same time, regular reports will be submitted to Euler Hermes on the conclusion and actual settlement of these import transactions.

4. Follow-up financing

Once you have successfully used the Shopping Line, you can consider taking out further shopping line cover.

Information for banks

Shopping line cover enables banks to structure financing for several import transactions within a single credit facility. This allows financing to be provided flexibly and efficiently.

Benefits for banks

Financing multiple procurement projects within a single structure
Flexible disbursements in several instalments
Long-term financing framework
High value retention of the cover thanks to the Federal Government’s AAA rating
Clear reporting and governancestructure
Promotion of business relationships with international customers and German exporters

Supplementary cover

Shopping line cover can be supplemented, if required, by:

Securitisation guarantee (for the refinancing of export loans – improved terms for the refinancing institution)
covered bond guarantee (for Pfandbrief banks to refinance their own Pfandbrief business – hedging against the risk of withdrawal of receivables for the benefit of Pfandbrief creditors)
Securitisation guarantee for the KfW refinancing programme (enables participation in the KfW programme, through which liquidity can be provided by refinancing claims backed by the federal government) – Currently in the pilot phase – Please feel free to contact us regarding specific transactions.

Exporters are free to arrange their own guarantees (e.g. a manufacturing risk cover).

Information for foreign customers

Shopping line cover provides a flexible financing facility for the purchase of goods and services from various German exporters. This enables purchases to be financed as required within an agreed credit facility.

Benefits for borrowers

Flexible use of a financial loan for multiple procurement projects
Access to goods and services from German suppliers
Long-term financing within a structured framework
Attractive pricing thanks to the Federal Government’s AAA rating
Support in developing business relationships with German exporters

Obligations of the borrower

The borrower undertakes, in particular, to:

comply with the minimum requirements for German imports,
actively promoting business relationships with German exporters,
fulfilling reporting obligations,
comply with legal requirements under the cover (e.g. anti-corruption regulations, sanctions)

Information for German exporters

Shopping line cover supports the financing of international procurement projects and can thus create additional sales opportunities for German companies. At the same time, it strengthens existing and new business relationships between foreign buyers and exporters based in Germany. German exporters are not automatically covered by shopping line cover. The cover is provided for the benefit of the financing institution and serves to secure the financial loan. Exporters may arrange their own guarantees outside the scope of shopping line cover (e.g. a manufacturing risk cover) outside the scope of the Shopping line cover.

How do German exporters benefit nonetheless?

Supporting long-term business relationships with international buyers
Potentially higher demand for goods and services of German origin
Easier access to financing solutions for procurement projects
Improved financing options for foreign customers and potentially greater consideration given to German exporters in a competitive context

Overview of shopping line guarantees

Overview by industry

Industry

Country

UFlex Limited

Packaging industry

Country: India
Volume: 161m euros
Term: 10 Years
Participating banks: DZ Bank

Engie SA

Energy

Country: France
Volume: 1033m euros
Term: 15 Years
Participating banks: Banking consortium led by Citibank

Enel S.p.A.

Energy

Country: Italy
Volume: 1047m euros
Term: 13.5 Years
Participating banks: Banking consortium led by Citibank

General conditions

Shopping line cover is based on clearly defined eligibility and compliance requirements.

These include, in particular:

Compliance with the minimum requirements for German imports
Active promotion of business relationships with German exporters
Compliance with legal requirements (e.g. government regulations and sanctions)
Regular reporting on German procurement
Taking environmental, social and climate requirements into account

FAQ – shopping line cover

Who is covered under the shopping line cover?

The shopping line cover is provided for the benefit of the financing institution. The bank is the beneficiary of the cover.

Are German exporters automatically covered by the Shopping Line?

No. German exporters benefit from additional financing options for their customers, but are not automatically covered by guarantees.

Can several export transactions be financed under a single shopping line?

Yes. The shopping line cover is specifically designed to finance a wide range of import transactions involving several exporters.

What is the significance of German imports?

Promoting German exports and Germany as a business location is a key objective of the shopping line cover. Consequently, minimum requirements apply to German imports.