April 26 (Bloomberg) -- Norway will form a fully state-owned lender to fund export credits to replace Eksportfinans ASA that is being wound down.
The company, called Eksportkreditt Norge AS, will provide financing in the form of state-subsidised CIRR loans and CIRR-qualified market loans on commercial terms, the Industry and Trade Ministry said today in an e-mailed statement. CIRR loans are loans granted to borrowers for export projects on terms compliant with an Organization for Economic Cooperation and Development arrangement, the ministry said.
“Export Credit Norway will be established in order to ensure a robust and competitive export financing scheme for Norwegian industry,” Trade and Industry Minister Trond Giske said in the statement. “The loans will be financed by the state, which ensures companies’ access to credit in situations where credit is not available in the capital markets.”
Norway in November decided to wind down Eksportfinans after rejecting the lender’s pleas to sidestep European capital rules limiting loans to single industries. The move led Moody’s Investors Service to downgrade the company to junk, roiling credit markets as far away as Japan. The 50-year-old company has about $39 billion in bonds outstanding.
The government defended its move to remove support from Eksportfinans as necessary to safeguard financing for the country’s exporters.
Eksportfinans is 15 percent owned by the government. DNB ASA, the country’s biggest bank, holds 40 percent, while 23 percent is held by Nordea Bank AB, the largest Nordic lender. Danske Bank A/S in Copenhagen owns 8.09 percent.
The new company will be established by July 1. It will receive grants from the government for its entire operations, which will be set in annual budgets, according to the ministry.
“All loan applicants who meet the requirements will be offered loans, and there will be no limit concerning large exposures,” the ministry said.
They government has said it would support Norway’s export industry with as much as 40 billion kroner ($7 billion) in direct loans.
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