Untied Loan Guarantees provide cover against the default risk of a repayment claim as agreed in a loan agreement.
Hence, the guarantee encompasses political as well as commercial risks:
- Political measures: Legislative or administrative measures
- War, armed conflicts, riots and revolution abroad
- Conversion and transfer risks
- Exchange rate losses on amounts deposited due to a national devaluation
- Insolvency of borrower (in case of private foreign debtors)
- Loss of receivables due to settlement in court or out of court as well as unsuccessful execution
- Suspension of payment by the foreign debtor
- Non-payment within one month after maturity (protracted default)
The scope of cover can be limited to political risks on application. Furthermore, the Federal Government may exclude or limit the extent of cover for certain risks when deciding on issuing a guarantee.