Federal Government and other European countries allow cruise lines to pause their repayments of export credit guarantees

With the coronavirus outbreak, the cruise business has ground to a halt. Cruise liners across the world have all but stopped operations. This sudden loss in earnings is also spilling down to European shipbuilders and affecting their order books. There is a dangers that a lack of liquidity will result in cancelled shipbuilding contracts and delayed investments. The impact on thousands of employees in the European shipyards and the many companies in the supply chain would be disastrous.

Public-sector export guarantees are a standard feature of the financing mechanism for new cruise ships. In Germany alone, some €25 billion worth of financing for cruise ships built in Germany is currently protected in this way. The Governments of Germany, Finland, France, Italy, and Norway want to prevent a loss of liquidity among the cruise line companies and have therefore agreed on principles that will allow these companies to pause their repayments of debt that was backed by public-sector export guarantees for a year upon application (a debt holiday). This move is intended to also prevent a negative impact on European shipyards and their suppliers. It is being implemented in close coordination with the Federal Ministry of Finance.

Said Federal Government Maritime Coordinator Norbert Brackmann: “The agreement reached with our European partners benefits the maritime industry in Germany and its suppliers. We are easing the pressure on cruise lines’ liquidity and thereby helping to stabilise the long-term business relations entertained by European shipyards during this crisis. There was an urgent need for this, given that the cruise business has been virtually paused by the coronavirus pandemic. The measures we have taken are designed to also ringfence thousands of jobs in European shipyards in their many suppliers. At the same time, we are also reducing the risk for the Federal Government in terms of repayments of government-backed financing for ships.”

Cruise line companies that wish to apply for a debt holiday can now turn to the relevant export credit agency via their ECA agents.