Issuing and monitoring

When we have been instructed by the Government to issue a guarantee or a loan, we meet with the guarantee holder or borrower.

Initially, we analyse the counterparty's activities, strategy, financial performance, capital structure and financial goals.

Based on the assessed financial risk, we establish the contractual terms and a fee for the risk, after which we issue the guarantee or loan.

We may establish a fee either for the entire period or for a shorter period. In the latter case, we are able to decide on a new fee for each new period.

Limiting the Government's risk

The financial risk strongly influences how we formulate the terms for the guarantee or the loan. It must be possible, for example, to renegotiate the fee if a company makes the decision to change its risk profile. We must also be able to prevent a situation in which other lenders gain higher priority than we do. Our goal is to establish clear conditions that limit the risk for the Government.

During the time to maturity, we monitor the guarantee holders and borrowers in order to see whether the Government's risk changes. This monitoring is similar to banks monitoring their corporate clients. We maintain a dialogue with the borrower or guarantee holder and document the development of our undertaking. An increased risk may cause us to request additional security. We inform the Government if there are big changes in the risk associated with a guarantee or loan.

In the annual accounts, our loans and guarantees are re-evaluated based on the risk of future losses.