INDUSTRIAL FINANCE DIVISION
TEL:
FAX:
071-601 5213
071-601 4947
CONFIDENTIAL
Pa
BANK OF ENGLAND
Threadneedle Street
London
EC2R 8AH
R J T Watts Esq HM Treasury Treasury Chambers Parliament Street London SW1P 3AG
MACAU AIRPORT
Roger
(ECGD's letter dated 17 August)
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18 August 1992
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Although we continue to see China as a good risk, we wonder whether this project should be a high priority for allocating scarce ECGD cover. This is of particular concern in view of the high level of exposure to China and Hong Kong - which, as you know, we consider to be increasingly one risk as 1997 approaches. Nonetheless, the amount of Chinese risk envisaged (£17mn) is small and, on balance, we would not wish to object to cover being provided in this case.
We agree with ECGD that option (b) is not acceptable: CAM could collapse and the Government of Macau will cease to exist after 1999. However, we recognise the sensitivity with Hong Kong in appearing to undermine the Sino-Portugese MOU (TELNO 1236 from FCO to Hong Kong attached) and accept the FCO proposal that, if an offer were made, the requirement for a first class bank guarantee should avoid specifying Bank of China as the provider of this guarantee.
We are conscious of a certain irony in that ECGD have sufficient delegated authority to cover the whole project as Macau risk and only need EGC approval as a consequence of their seeking better security through the Bank of China guarantee!
I am copying this letter to David Seddon and Terry Furness (FCO), Miles Faulkner (MoD), Philip Rose (ODA), Peter Casey (DTI), and to Victor Lunn-Rockliffe and Norman Lambert (ECGD).
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