TNAG-1053-FCO40-1303-China-and-Hong-Kong-Working-Group-1981 — Page 31

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whichever is the earlier. Termination payments due under

the contract are covered.

B

FINANCIAL SUPPORT

i

Lessors are eligible for ECGD's bank guarantee facilities. Under such facilities ECGD guarantees to a bank that bills of exchange (or promissory notes) drawn by the lessee to cover rent due will be met on due date and on the basis of this guarantee the bank will advance to the lessor funds at a preferential

rate of interest. In the case of leases of over 2 years

duration, ECGD would normally be prepared to pay the bank the difference between the appropriate internationally agreed fixed rate of export finance and the floating agreed rate of return

to the financing bank.

3

OPERATIONAL LEASES

A

COVER

i Under such leases rental payments reflect income to the

lessor from his investment in the goods leased. The total

earnings from a single lease may not be sufficient to cover

the cost of the goods and the lessor would aim to lease the

goods more than once, possibly to differing lessees.

* Pandit këshin ja di

CANA, PÈRE DONE

ii

Cover is available under ECGD's Specific Services Guarantee

or in the case of leases in the short term field under the

Comprehensive Services Guarantee. Both provide normal credit

insurance cover for sums, due under hiring contracts.

4

SECURITY

For leasing contracts with China involving a contract price of £1m

or more a guarantee of payment from the Bank of China is a fundamental

requirement of ECGD cover.

2