ANNEX A
ECGD's COVER FOR LEASING
1 ECGD can provide credit insurance cover and financial support
for both Financial and Operational Leases entered into by UK lessors
with lessees abroad, including China and Hong Kong.
2
FINANCIAL LEASES
A
i
COVER
Financial leases are basically a substitute for sale
contracts. The lessor undertakes to pay rentals to the lessor
for a minimum period and the aggregate value of those rentals
is sufficient for the lessor to recover his costs (eg purchase
overheads,
After
F
price of goods and associated services; cost of financing
the transaction) net of any associated tax benefits.
this minimum period the lessee may continue to lease
indefinitely for a nominal rent or buy the goods for a nominal
sum.
ii Cover for payment of sums due from the lessee under a
financial lease is given by way of a Specific Shipment Hiring
Policy which covers the normal causes of loss that apply to
sales of goods contracts and is effective from the date of
exportation of the goods. Except that rentals are paid on an
annuity basis, normal rules governing export credit policy
apply. Thus as least 10% (15% for leases beyond 2 years) of
the value of the goods leased is payable by delivery with the
balance paid at not longer than 6 monthly intervals over a
period commensurate with those applicable to a sale of the
goods on credit terms.
iii Cover is against non receipt of rent due under the leasing
contract but is subject to a limitation that in the event of
default it applies only to rent due up to the date on which
the contract can be terminated or up to 90 days after default,
1
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