Helping companies get the Export edge

Coface’s credit management service for UK businesses operating in overseas markets is unique. They offer a combination of credit insurance and receivables finance – to protect against bad debt and boost cash flow - supported by access to a worldwide database of 50 million companies, their ratings and financial information, as well as international multilingual debt collection services. This article looks at Coface’s Country Ratings. Country Ratings Globalisation and the pace of business today means that
companies often have to make rapid decisions about who they wish to trade with, within the UK and beyond. Coface’s Country Ratings support international trade and commerce by enhancing the security of transactions. They are available on 165 countries and assess the average level of risk associated with a country’s companies in connection with their short-term commercial transactions and closely measures how the related financial commitments are influenced by the country’s economic,
financial and political outlook.

Coface has developed a seven-grade classification ranging from A1 through to A4 for investment grade risks and B, C and D for below investment grade risks. Countries may also be placed on positive or negative “rating watch” due to an improvement or deterioration in their political or economic environment. As the full force of the credit crisis spread around the world, There have been a large number of Country Rating downgrades - 22 countries in January, 47 in April and 13 in September 2009. At this time, the ratings for most European countries seem to be stabilising, except for Austria, the Netherlands and Finland due to a decline in foreign demand. Portugal’s A3 rating was placed on negative watch due to the sharp contraction in household consumption and the drop in exports and investment. Western Europe seemed to have reached the lowest point of the recession - after the sharp drop in economic activity recorded in the fourth quarter of 2008 and first quarter of 2009, a glimmer of hope emerged in the second quarter of 2009.

Emerging Europe is the zone whose real economy is most affected by the crisis and whose currencies are still fragile. Latin America has shown a certain ability to resist the world crisis, but Central America is suffering from the North American recession. Therefore the ratings of small economies that continue to suffer the consequences of the crisis in the United States (Costa Rica, El Salvador and Guatemala) were placed on negative watch. Asia Pacific is the zone that shows the most positive signs of
recovery - already evident in the zone’s two largest economies. Nevertheless the negative watch placed on China’s A3 rating in January 2009 has been maintained due to recurrent problems of private sector companies, where the payment default risk is the highest. Country and sectoral ratings are frequently updated and available free of charge at www.trading-safely.com Country Risk Conference Coface holds an annual Country Risk Conference, where Country Risk and international strategy is analysed by leading
economists and corporate leaders, and practical information on mitigating trading risks is given. The next Coface UK & Ireland Country Risk Conference is taking place in June 2010 in Manchester. Further details will be available on Coface’s website www.cofaceuk.com. Coface’s credit management services can help companies reduce the risks associated with trading internationally. An increasing number of global transactions are now on open credit terms and Coface provides exporters with the credit management
tools to expand swiftly and safely into overseas markets. For more information visit www.cofaceuk.com