SACE and Project Finance: Supporting Italian Exports and Global Infrastructure

SACE (formerly known as SACE SIMEST), Italy's export credit agency, plays a crucial role in project finance deals, particularly those involving Italian exporters and international infrastructure projects. It acts as a catalyst, mitigating risks and providing guarantees that unlock financing for projects that might otherwise struggle to secure funding.

SACE's primary function in project finance is to provide various forms of credit insurance and guarantees to lenders and investors. These protections cover risks associated with political instability, non-payment by project sponsors, and currency inconvertibility. This risk mitigation is particularly valuable in emerging markets and developing countries, where these risks are often higher and can deter private investment.

The agency offers a range of products tailored to different project needs, including:

• Export Credit Insurance: This covers the risk of non-payment by foreign buyers of Italian goods and services. It's especially relevant for projects requiring significant equipment, engineering, and construction services from Italian companies.
• Investment Guarantees: These protect Italian companies investing in foreign projects against political risks such as expropriation, nationalization, and war. This encourages Italian participation in infrastructure development abroad.
• Buyer Credit Guarantees: SACE guarantees loans extended by banks to foreign buyers to finance the purchase of Italian goods and services. This enables buyers to acquire necessary equipment and services on credit terms, facilitating Italian exports.
• Direct Lending: In certain cases, SACE can provide direct loans to project sponsors, supplementing financing from other sources. This is typically reserved for strategically important projects with strong Italian content.

By providing these financial instruments, SACE significantly lowers the risk profile of project finance transactions. This, in turn, allows projects to attract a broader range of lenders, including commercial banks and institutional investors, who are more willing to participate with SACE's backing.

The benefits of SACE's involvement extend beyond simply securing financing. SACE's rigorous due diligence process helps to ensure projects are well-structured and viable, enhancing their long-term sustainability. Furthermore, SACE's presence can increase confidence among other stakeholders, including governments and local communities.

In conclusion, SACE is a powerful tool for promoting Italian exports and supporting the development of infrastructure worldwide. By mitigating risks and facilitating access to finance, it plays a vital role in enabling project finance deals and driving economic growth.