Buyer Credit Pricing for Natural Gas Exports Using Country Risk Ratings
It is important for exporters of commodities, including natural gas, to price their exports correctly in times of excess demand. It is equally important for providers of buyer credit for importers of natural gas to price the finance for the shipments correctly. Pricing buyer credit is vital for the...
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| Format: | Book Chapter |
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Springer-Verlag Berlin Heidelberg
2013
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| Online Access: | http://hdl.handle.net/20.500.11937/5399 |
| _version_ | 1848744785551032320 |
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| author | Simpson, John |
| author2 | John L. Simpson |
| author_facet | John L. Simpson Simpson, John |
| author_sort | Simpson, John |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | It is important for exporters of commodities, including natural gas, to price their exports correctly in times of excess demand. It is equally important for providers of buyer credit for importers of natural gas to price the finance for the shipments correctly. Pricing buyer credit is vital for the lender’s goals, which includes shareholder wealth maximization if the lender is a bank or a corporation, but, more importantly pricing credit is important for the optimization of the risk and return relationship and the diversification of unsystematic risks in export loan assets. In this chapter, the price of natural gas from a gas exporting country, such as Australia, is deemed to be the amount of export finance that might be required as buyer credit. Export returns thus represent the change in the amount of export finance required by buyers. A higher buyer credit change means a greater amount of credit required. Using country risk ratings, a risk premium is ascribed to this buyer credit in order to avoid mispricing of exports and buyer credit in times of excess demand for gas and thus buyer credit. Importer country examples of the US and China are investigated. It is posited that country risk ratings can determine the magnitude of the risk premium to be applied to buyer credit, consistent with risk/return trade-off theory. |
| first_indexed | 2025-11-14T06:06:59Z |
| format | Book Chapter |
| id | curtin-20.500.11937-5399 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T06:06:59Z |
| publishDate | 2013 |
| publisher | Springer-Verlag Berlin Heidelberg |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-53992023-02-07T08:01:23Z Buyer Credit Pricing for Natural Gas Exports Using Country Risk Ratings Simpson, John John L. Simpson Wim Westerman André Dorsman United States Risk Pricing Ratings Buyer credit China Export Gas It is important for exporters of commodities, including natural gas, to price their exports correctly in times of excess demand. It is equally important for providers of buyer credit for importers of natural gas to price the finance for the shipments correctly. Pricing buyer credit is vital for the lender’s goals, which includes shareholder wealth maximization if the lender is a bank or a corporation, but, more importantly pricing credit is important for the optimization of the risk and return relationship and the diversification of unsystematic risks in export loan assets. In this chapter, the price of natural gas from a gas exporting country, such as Australia, is deemed to be the amount of export finance that might be required as buyer credit. Export returns thus represent the change in the amount of export finance required by buyers. A higher buyer credit change means a greater amount of credit required. Using country risk ratings, a risk premium is ascribed to this buyer credit in order to avoid mispricing of exports and buyer credit in times of excess demand for gas and thus buyer credit. Importer country examples of the US and China are investigated. It is posited that country risk ratings can determine the magnitude of the risk premium to be applied to buyer credit, consistent with risk/return trade-off theory. 2013 Book Chapter http://hdl.handle.net/20.500.11937/5399 10.1007/978-3-642-30601-3_3 Springer-Verlag Berlin Heidelberg restricted |
| spellingShingle | United States Risk Pricing Ratings Buyer credit China Export Gas Simpson, John Buyer Credit Pricing for Natural Gas Exports Using Country Risk Ratings |
| title | Buyer Credit Pricing for Natural Gas Exports Using Country Risk Ratings |
| title_full | Buyer Credit Pricing for Natural Gas Exports Using Country Risk Ratings |
| title_fullStr | Buyer Credit Pricing for Natural Gas Exports Using Country Risk Ratings |
| title_full_unstemmed | Buyer Credit Pricing for Natural Gas Exports Using Country Risk Ratings |
| title_short | Buyer Credit Pricing for Natural Gas Exports Using Country Risk Ratings |
| title_sort | buyer credit pricing for natural gas exports using country risk ratings |
| topic | United States Risk Pricing Ratings Buyer credit China Export Gas |
| url | http://hdl.handle.net/20.500.11937/5399 |