Glossary
Negotiable instrument
Financial instrument that can be transferred with a legally binding effect towards third parties without notification to the issuer.
Negotiating bank
In a letter of credit operation the bank that accepts the documents for the purpose of examining and crediting the documentary credit amount from the exporter's beneficiary.
Net present value
Estimate of all inward and outward cash flows of a project or of a transaction discounted to the present date.
Nominal value
Face value.
Non-recourse financing
Financing in which the financier takes the risk and has no recourse to the project company or the exporter.
Note
Short term for financial instruments consisting of unconditional and irrevocable written promise to pay a sum of money to someone on a certain date.
OECD
Organization for Economic Co-operation and Development.
Off-cover
Term used by ECAs to denote that coverage is not provided for the particular geographical area or risk type.
Off-shore
Term used to denote a geographical area, usually on exotic location, where government control and regulations concerning financial markets are laxed.
Officially supported export credit
Export credit with ECA or governmental credit insurance cover
On demand
At sight, payable when due and presented.
On sight
On demand, payable when due and presented.
Open account
Means of payment by which the seller extends credit directly to the buyer. The goods are shipped and delivered before payment or acceptance of any negotiable instrument by the buyer. The seller is thus taking the direct risk of the buyer's insolvency or unwillingness to pay. In international commerce usual only when a long-standing relationship between the buyer and seller exists.
Payable in arrears
Expression used in connection with interest payments denoting that interest is payable at the end of the interest period as opposed to payable in advance
Payee
The person or company to whom the a draft or bill is payable
Performance bond
A bond provided by a bank or insurance company to assure the buyer that the supplier or contractor will perform according to the contract. The bond will compensate the buyer should the supplier fail. Typically 10 per cent of the contract price.
Pledge
Transfer of an asset to secure payment of obligation without transfer of title or ownership. In event of default the borrower can acquire the pledged assets as repayment.
Political risk
Risk of loss due to default on payments of exports arising from political causes: currency inconvertibility, expropriation of the Obligor, other government interference, war or revolution
Political risk coverage
Coverage provided for the ECAs for political risk. Typically extends to 95 - 100 per cent of the loan amount.
Post-shipment financing
Financing for the period following shipment. Required to ensure sufficient liquidity on part of the seller until the finished products have reached the purchaser and payments become due and received.
Post-shipment risk
Event causing loss after shipment of goods.
Pre-shipment financing
Financing for the period prior to the shipment of goods to support exporters pre-export activities and provide additional working capital.
Premium
The amount paid in advance to the provider of coverage against loss.
Pro forma invoice
The first draft of an exporter's bill to an importer. An invoice providing information on the basic details of the goods to be delivered, their quality, quantity and price. Based on the pro forma invoice the purchaser decides whether to confirm his order or not.
Project finance
A way of financing big capital projects. The financing depends on the expected future project cash flows as the security for the financing primarily without direct recourse to equity investors. Project companies are usually low-equity high gearing SPV:s with little or no assets in the beginning of project.
Promissory note
An unconditional promise in writing issued and signed by the debtor to pay on demand or on a fixed date a stated amount of money to the order of a specified person or the bearer. Transferred by endorsement. Rules governing P/N are often based on the Geneva Convention on Bs/E.
