PowerPointPrsentation

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Joël Paillot Director Export Underwriting Allgemei
ne Kreditversicherung Coface AG
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THE COFACE GROUP

• Strong partners in a strong group Allgemeine
  Kredit Coface and Coface Group
• Worlds leading credit insurance group and
  service provider round the
  credit management, in credit information, trade
  rating and debt management.
• AA by rating agency Fitch IBCA / Aa3 by rating
  agency Moodys
• 4,200 staff members worldwide in the group,
  thereof 700 at AKC
• 83,000 customers of all sizes and trade sectors
  - in 140 countries
• worldwide
• Efficient uniform database worldwide with
  direct access to
• 44 million companies.
• 1.085 million EUR turnover in 2003 / 45.5
  million EUR profit after tax

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THE COUNTRY RISK _at_RATING

• The country risk _at_rating takes into account the
  following risks
• Political factors
• risk of stronger fluctuation of the exchange rate
• debt service of a country to foreign investors
• risk of a sudden sharp devaluation (inflation)
• risk of a systemic crisis in the banking sector
• cyclical risk
• payment experience (in short-term transactions)

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THE COUNTRY RISK _at_RATING
There are 7 different rating grades A1 to A4
(investment grades) The country's political and
economic Environment makes the probability of
payment defaults quite low. The situation of the
companies depends more on their particular sector
of activity.
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THE COUNTRY RISK _at_RATING
B C D (speculative grades)
The economic and political environment faces
ongoing uncertainties and is likely to affect the
companies payment behaviour.
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THE COUNTRY RISK _at_RATING
The country risk _at_ratings are now available for
140 countries and regularly updated on the web
site


www.cofacerating.com
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THE 10 NEW EU MEMBERS AS PER MAY 2004
Sept. 2003
Jul 2003
Apr 2003
Dec 2002
Sep 2002
Jan 2002
Apr 2001
Jan 2001
A2
 
 
 
 
 
 
A2
Hungary
A2
 
 
 
 
 
 
A3
Czech Republic
A4
 
 
 
 
A4?
A4
A3
Poland
A3
 
 
A4
B?
 
 
B
Slovakia
A2
 
 
 
 
 
 
A2
Slovenia
A4
 
 
 
 
 
 
A4
Lithuania
A4
 
 
 
 
 
 
A4
Latvia
A3
 
 
 
 
 
 
A3
Estonia
A3
 
 
 
 
 
Malta
A3
A3
 
 
 
 
 
Cyprus
A3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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HUNGARY (A2)
area 93,000
km2 population 10.2 million GNP per
capita 57 of the EU averageGNP
growth 2.9 (2003) 3.2
(2004) 3.6
(2005) inflation rate 4.7
(2003), 5.2 (2004)unemployment rate 5.8
current account bal. - 5.9 hourly wage
3.83 Euro - EU (15) 22.21 Euro
EU (25) 19.09 Euro tax rate for
companies 16
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COFACE ACTIVITIES IN HUNGARY (A2)
Information and debt collection Coface
Intercredit Known companies 555 000
Total exposure 1 billion Euro
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HUNGARY (A2) - TRADE

• From all central European countries, Hungary is
  the most advanced in terms of reforms.
• Privatizations were initiated early and are
  almost completed. The remaining state-owned
  enterprises (127 companies) will be disposed of
  by 2006.
• Very open economy Trade with the EU Export
  75.1
  Import 56.3
• Main trading partner Germany (before Austria
  and Italy)
• 1/3 of Hungarian exports
  go to Germany
• 1/4 of Hungarian imports
  come from Germany

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HUNGARY (A2) - PRODUCTS
Main productscar bodies and engine parts,
electronic equipment parts, iron, sheet metal and
plastic products Investors With over 10 billion
Euro, German companies are the largest investors,
representing 1/3 of the total volume. (Audi,
Deutsche Telekom (Matáv), but also Toyota,
Telenor, ASA, Cora, Vivendi, Telecom, etc.)

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HUNGARY (A2) - PRODUCTS
One of the most advanced financial systems in the
region Three banks were privatized recently
Postbank, Konzumbank,Hypothekenbank. The banks
are largely controlled by foreign banks
(especially from Europe).
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HUNGARY (A2) - CURRENCY
Currency Forint Strong devaluation of the
Forint due to doubts in the exchange rate policy
and the credibility of the governments budget
plans, rising public deficit. Stabilization
expected, however, introduction of the Euro not
before 2008. Increase of export and investments
is expected.
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HUNGARY (A2) - WORKING POPULATION
Service sector 60 Industry 35 Agriculture
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HUNGARY (A2) - ACTIVITY SECTORS
Chemicals, wood, electronics, electrical
appliances Agriculture, construction,
textiles, paper
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HUNGARY (A2) - PAYMENT EXPERIENCE
PAYMENT INCIDENTS INDEX HUNGARY
Credit period 30 - 90 days Default in
payment 61 - 90 days delayed payments
80
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HUNGARY (A2) - INSOLVENCIES
INSOLVENCY TRENDS HUNGARY
                                                  
     
No deterioration of the payment behaviour despite
the trend in company insolvencies.
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HUNGARY (A2) - INSOLVENCIES
Company insolvencies 7,790 in 2003
6,179 in
2002 Insolvency rate 0.9 Trend
Improvement to be expected in 2004 due to more
attractive exchange rate, cyclical upswing in the
EU
26.1
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HUNGARY

• Good experience of the Coface group
• wage level too high for new investors (IBM,
  Philips and Flextronics have closed some
  factories)
• bureaucracy, lengthy legal system
• positive overall assessment

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Thank you very much for your attention ... Do
you have any further questions? The
presentations can be downloaded from
www.export-invest.com or requested from Katja
Wölk-Michel, Marketing Department
(katja.woelk-michel_at_ak-coface.de).