OECD minimum premium rates explained

OECD minimum premium rates are the floors that Participants to the OECD Arrangement must charge for credit risk on officially supported export credits. Article 21 of the Arrangement requires Participants to charge no less than the applicable Minimum Premium Rate (MPR). Those floors discipline ECA premium competition among export credit agency programmes.

How OECD minimum premium rates are calculated

Article 21 a) of the Arrangement (January 2026 text, TAD/PG(2026)1) states that the applicable MPR is determined according to: the applicable country risk classification; the time at risk (the Horizon of Risk or HOR); the selected buyer risk category of the obligor; the percentage of political and commercial risk cover and quality of official export credit product provided; any country risk mitigation technique applied; and any buyer risk credit enhancements that have been applied.

Article 21 b) states that MPRs are expressed in percentages of the principal value of the credit as if premium were collected in full at the date of the first drawdown of the credit. Calculation detail for Category 1 to 7 transactions is set out in Annex VI of the 2026 Arrangement. Annex VII covers premium benchmarks for market benchmark transactions. Article 20 separately requires that premium be charged, in addition to interest, to cover the risk of non-repayment of export credits, on a risk-based basis. OECD minimum premium rates therefore operate as a multi-factor schedule rather than a single country tariff.

Country risk categories 0 to 7

Article 22 classifies countries into eight Country Risk Categories (0 to 7). MPRs have been established for Categories 1 through 7, but not for Category 0, where country risk is considered negligible and credit risk is predominantly obligor or guarantor risk. The OECD country risk classification reflects transfer and convertibility risk and force majeure cases such as war, expropriation, revolution, civil disturbance, floods and earthquakes, as described in the Arrangement country risk provisions.

Country Risk Classifications are monitored on an ongoing basis and reviewed at least annually. When a country is reclassified, Article 22 d) requires Participants, no later than five working days after the Secretariat communicates the change, to charge premium rates at or above the MPRs associated with the new Country Risk Category.

US EXIM exposure fee guidance records that Category 0 countries are High Income OECD and Euro Area markets, and that from September 2011 OECD premium rules established minimum fees for sovereign and non-sovereign risk and a market-based pricing structure for Category 0 transactions. EXIM maps its exposure fee levels to OECD classifications for markets where it provides cover.

Buyer risk, guarantees and horizon of risk

Obligors and guarantors in Categories 1 to 7 are classified into buyer risk categories related to the country of the obligor or guarantor. Sovereign obligors and guarantors are classified in buyer risk category SOV/CC0. The Arrangement provides a Better than Sovereign (SOV+) category in defined cases; MPRs associated with SOV+ are 10 percent lower than those associated with SOV/CC0.

Article 21 e) states that the applicable country risk classification is that of the obligor's country and the applicable buyer risk classification is that of the obligor, unless an irrevocable, unconditional, on-demand, legally valid and enforceable third-party guarantee of the total debt repayment obligation for the entire credit duration is provided by a creditworthy third party. In that case a Participant may apply the guarantor's country risk classification and buyer risk category. Criteria for third-party guarantees and for multilateral or regional institutions appear in Annex VIII.

Horizon of Risk used in MPR calculation is one-half of the disbursement period plus the entire repayment period, assuming a regular repayment profile of equal semi-annual instalments of principal plus accrued interest beginning six months after the starting point of credit. Non-standard profiles use an equivalent repayment period formula in Article 21 g). Project finance repayment profiles that defer principal or sculpt amortisation therefore translate into an equivalent HOR before the MPR percentage is applied to principal.

Product quality, mitigation and feedback

Article 25 differentiates MPRs for differing quality of export credit products and percentage of cover, as set out in Annex VI. Higher quality cover and higher percentages of cover attract different premium factors than lower quality or lower percentage products under that annex. Articles 26 and 27 address country risk mitigation techniques and buyer risk credit enhancements (BRCE), with ceilings on credit enhancement factors and notification duties when discounts or improved classifications are applied. Article 27 c) caps the credit enhancement factor achievable through BRCEs at 0.35 for Category 1 to 7 transactions, and for market benchmark transactions allows a maximum discount of 25 percent to the market benchmark MPR subject to the applicable Minimum Actuarial Premium rate floor.

Article 28 requires Premium Feedback Tools to monitor and adjust MPRs by reference to actual experience of institutions providing official export credits and private market information on credit risk pricing. Highest-risk countries in Category 7 are, in principle, subject to premium rates in excess of the MPRs for that Category, determined by the Participant providing support. Prior notification articles elsewhere in the Arrangement require Participants to notify peers when specified premium treatments are used, including certain third-party guarantor pricing and mitigation techniques, so that MPR discipline remains transparent among Participants.

Institutional boundary

OECD minimum premium rates are Participant disciplines under a Gentlemen's Agreement, not a domestic tariff schedule. National ECAs may charge above the floor. They may not undercut the applicable MPR for in-scope official support with a repayment term of two years or more. Project finance and asset-backed structures can engage market benchmark or syndicated package pricing rules in Article 21 c) where conditions are met, including commercial market participation thresholds for syndicated packages. Credit officers translating term sheets into ECA premium expectations therefore start from country category, buyer risk, HOR and cover percentage, then apply any notified mitigation or enhancement.