The Transfer from Coface to Bpifrance

After seven decades as France’s export credit agency (ECA), on 31 December 2016, Compagnie Française d’Assurance pour le Commerce Extérieur (Coface) transferred its State export credit guarantee activities to Bpifrance Assurance Export S.A.S. (Bpifrance A.E.).

Bpifrance A.E., a subsidiary of the French public investment bank Bpifrance S.A., is now responsible for managing France’s export credit guarantees. The French State will control Bpifrance A.E.’s management, with France’s Minister of Economy appointing key positions. All existing insurance policies and export credit guarantees issued by Coface have been transferred directly to the French State to be managed by Bpifrance A.E. The amending legislation effecting the transfer (Loi n° 2015-1786 du 29 Décembre 2015 de Finances Rectificative pour 2015) stipulates that the transfer does not impact rights and obligations under existing Coface policies or guarantees, or give rise to any termination or compensation rights under any such document or any right to invoke a default or early repayment clause under any facility benefitting from any such policy or guarantee.

Impact of the Transfer

A joint press release by Coface and Bpifrance A.E. states that the transfer of export credit guarantee activities “aims to further strengthen the competitiveness of public export guarantees, one of the pillars of government policy to support the development of French businesses”. A transition from indirect to direct State cover will help achieve this objective. Previously, Coface issued insurance policies and export guarantees in its own name, with Coface acting as an insurance issuer that the French State then reinsured, or guaranteed. Under the new legal regime, Bpifrance A.E. will issue export credit guarantees and insurance policies in the name of and on behalf of the French State, with no need for any back-to-back reinsurance or guarantee arrangement.

A further benefit of the change is that certain institutions previously unable to participate in French ECA-backed financings now may be able to do so. For example, certain institutions, including German Pfandbrief banks, did not consider Coface-guaranteed or insured loans to be true sovereign-covered assets because of the indirect nature of the French State support. Consequently, they were unable to enjoy the benefit of Coface cover.

In 2016, in anticipation of the transfer, Fitch Ratings Inc. confirmed that the transfer would not affect the credit rating agency’s risk assessment of loans backed by French export credit guarantees or insurances. As of the date of this post, the major rating agencies have not reacted or acted further with respect to the change.

The Future Implications

This transition to a clearer and more direct process will hopefully mean that more banks will be able and willing to lend to French ECA–supported project financings, bringing more liquidity to the market for borrowers and sponsors of projects, and helping more projects successfully reach financial close.

In the meantime, following the transfer of its State export credit activities to Bpifrance A.E., Coface remains an active private company and will continue to focus on its core business as a provider of credit insurance.