EFIC PRESENTATION. Guy Morgan Treasurer June 2014

Transcription

1 EFIC PRESENTATION Guy Morgan Treasurer June 2014

2 Agenda Executive summary The Guarantee Structure and credit Funding Investing The business Financials and exposures Products, customers and case studies Enquiries/contacts 1

3 Executive summary Explicit statutory guarantee from the Commonwealth of Australia AAA rating (S&P) 100% owned by the Commonwealth of Australia Export Finance and Insurance Corporation Act 1991 A self-funding statutory corporation Australia s export credit agency (ECA) Support the growth of Australian companies in their international activities Provide tailored financial solutions when the private market is unwilling or unable to support them Over 50 years of finance and industry experience 2

4 Efic s Guarantee Export Finance and Insurance Corporation Act 1991 Section 62 - Guarantee by Commonwealth By force of this section, the due payment by Efic of any money that becomes payable by Efic to a person other than the Commonwealth is guaranteed by the Commonwealth. 3

5 Efic s structure Statutory corporation under the Efic Act, 1991 Part of the Department of Foreign Affairs and Trade portfolio Board members (other than the Managing Director) appointed by the Minister Commercial Account decisions by Efic s Board and management. Efic on-risk National Interest Account decisions by Minister for Trade. Efic not on-risk 4

6 Efic s credit credentials Explicit statutory guarantee AAA rating (S&P) 100% owned by the Commonwealth High level of implicit Commonwealth support due to our structure and relationship with the Government Efic debt is repo eligible with the Reserve Bank of Australia 0% risk weighting 5

7 Funding Self funding Modest funding requirements Term debt issues are limited and infrequent Funding programs as authorised by Minister per EFIC Act: Program Facility Limit $m Recent Utilisation ECP - US$ 1,500 ~500 MTN - US$ 2,000 ~700 MTN - A$ 1,500 ~1,000 TOTAL PROGRAMS 5,000 ~2,200 Funding requirements are driven by the business 6

8 Funding Sample term issues - mainly A$, due to favourable $A/US$ basis swap Debt Issues - Examples Size Original Term Type Maturity MTN - US$ US$60m 10 year FRN Sep-14 US$95m 19.5 year FRN Mar-15 US$40m 10 year FRN Dec-20 MTN - A$ A$200m 5 year FRN Sep-16 A$500m 10 year Fixed Nov-20 A$235m 13 year Fixed Feb-26 Callable debt - ~10 deals; >US$140m Efic maintains a conservative funding strategy currently >95% match funded 7

9 Efic s exposures at 30 June 2013* - industry sector Exposures by industry sector *Commercial Account exposures 8

10 Efic s exposures at 30 June 2013* - funding Exposures by facility type *Commercial Account exposures 9

11 Investing Commonwealth Authorities and Companies Act 1997 S 18 (3) (d) Investment Approval 2008/01 Export Finance and Insurance Corporation - Banks, BBB- or better - Approved entities, AA- or better - No investments in the nature of equity, sub debt, hybrid equity - Investment portfolio restrictions - E.g. total investment in banks <A-, <25% of portfolio - Supplemented by tighter Board and management restrictions 1 July 2014 Public Governance, Performance and Accountability Act. S 59 (1) (b) (iii) In any manner approved by the Finance Minister 10

12 The business Efic supports Australian exporters and overseas investors when the private market is unable or unwilling to do so. Minister of Trade in Efic s Statement of Expectations: Efic is to manage its activities so that it does not compete directly with existing commercial sector providers of insurance, reinsurance and financial services and products which support Australian exports and foreign investment Role complementary to commercial lenders Efic works directly with businesses and their banks to provide loans, guarantees, bonds and insurance products Operates on a commercial basis with independent board 11

13 The business - lending/guarantees Efic Act defines eligible export transactions Assets drive the funding requirement typically foreign currency No opportunistic over-funding Can pre-fund once transaction signed for future drawdown Structured Trade and Project Finance Large, one-off, long term Typically funded transactions Long lead times - predictable SME Small, frequent, short term Typically use a broad product range (including funding) Strong growth 12

14 The business - strategy Greater focus on SMEs and Continued focus on frontier and emerging markets 13

15 The business purpose & key functions Efic s primary purpose is to facilitate and encourage Australian export trade on a commercial basis. Efic provides financial support to Australian based companies which are exporting, in the global supply chain or seeking to grow internationally. Four key functions per section 7 Efic Act: Facilitate and encourage Australian export trade by providing insurance, financial services and products Encourage banks and other financial institutions in Australia to finance or assist in financing Australian exports Manage the Australian Government s discontinued aid-supported mixed credit programs Provide information and advice regarding insurance and financial arrangements to support Australian exports 14

16 The business - assessment criteria Australian involvement in: export of capital goods or services overseas investment export contracts Market gap Project or transaction is commercially viable Environment and social responsibility requirements, International obligations 15

17 The business what Efic contributes to customers Country risk tolerance Wide experience in emerging markets Can draw on resources beyond the commercial domain: other export credit agencies multilateral agencies and development finance institutions Australia s network of diplomatic posts Increasing diversity of finance and insurance solutions, services, products 16

18 Financials Balance Sheet - 30 June 2013 Assets A$m A$m Liabilities Receivables from Fin. Institutions 130 2,194 Borrowings AFS investment securities Guarantees at fair value Loans & receivables Derivatives Loans to NIA at fair value Other Derivatives Equity Other 50 Commercial Account 2,707 2,707 Capital (adjusted) Cash ca$216m Callable A$200m Cash increase A$200m Total ca$616m NIA NIA Profit ($m) Dividend ($m) Special Div ($m) Equity ($m) Return on average equity 7% 6% 7% 10% 9% 6% 12% 9% 11% 11% Dividend payout ratio 100% 100% 100% 75% 50% 50% 50% 50% 50% 55% EFIC Capital Adequacy CA Ratio excluding callable capital CA Ratio including callable capital

19 Efic s exposures at 30 June A$2.6 billion across 24 countries 18

20 Efic s products - finance and insurance solutions DIRECT LOANS GUARANTEES INSURANCE Corporate Project companies Foreign government Export finance guarantees Bonds/guarantees: performance, advance payment and warranty bonds; US surety bonds documentary credit guarantees TAILORED SOLUTIONS Political risk insurance Export payments insurance Bond insurance

21 Efic s broad range of clients EXPORTERS BUYERS of Australian exports INVESTORS Companies exporting from Australia or facilitating exports, including service providers and manufacturers Foreign companies, including foreign subsidiaries of Australian companies Foreign governments Australian-based companies investing overseas Australian subsidiaries of foreign companies FINANCIAL INSTITUTIONS Lenders Hedge providers 20

22 Case study PNG LNG project Industry: Oil and gas Country: Papua New Guinea Product: Direct loan Efic support: US$350 million Customer: The ExxonMobil-led liquefied natural gas (LNG) project to Papua New Guinea (PNG) is one of the world s largest project finance transactions. Need: Our motivation for participating was to help Australian exporters pursue contracts for the project s construction. Result: Our direct loan helped Australian companies win contracts worth over US$1 billion, along with substantial subcontracting opportunities.

23 Case study African Underground Mining Services Industry: Mining and mining services Country: Ghana and Mali Product: Direct loan Efic support: US$15 million Customer: AUMS is an underground mining services company operating in Africa and is a joint venture between leading miners Barminco and Ausdrill. Need: AUMS needed finance for equipment and working capital for new mining contracts, at a time when credit was tight in emerging markets post-gfc. Result: Our direct loan facility allowed AUMS to take on these contracts using locally manufactured mining equipment from Tasmania.

24 Case study Drift International Industry: Arts and Recreational Services Country: Product: Worldwide Direct loan Customer: Drift International is a film production company that was producing Australian surfing drama Drift. Need: Drift needed additional funds to cover the costs of international pre-sale so it could complete the production. Result: Our direct loan helped Drift to pay for its international marketing/distribution efforts, as without this the film wouldn t have proceeded.

25 Case study ANCA Industry: Manufacturing Country: Hong Kong Product: Export working capital guarantee Efic support: $4 million Customer: ANCA designs and manufactures high-end precision grinders, tool design software and machines that produce complex tools. Need: ANCA needed working capital to support a high value contract with a global Chinese organisation based in Hong Kong. Result: Our export working capital guarantee helped ANCA to secure this supply contract, as well as other export transactions.

26 Case study Bothar Boring & Tunnelling Industry: Construction Country: Australia Product: Export working capital guarantee Efic support: $2 million Customer: Bothar is an engineering services company that installs and fixes underground facilities for water, gas, sewage and housing cables. Need: Bothar needed additional working capital to fulfil two new drilling contracts with Australian Pacific LNG and Gladstone GLNG. Result: Our export working capital guarantee gave Bothar the capital it needed, with a guarantee also being given for another contract in Kuwait.

27 Case study Camatic Industry: Manufacturing Country: United States Product: Export working capital guarantee Efic support: US$1.6 million Customer: Camatic manufactures seating for stadiums, theatres and cinemas. Need: Camatic needed working capital for a seating contract for the new San Francisco 49ers football stadium in Santa Clara, California. Result: Our export working capital guarantee allowed Camatic to take on this project, manufacturing and installing 68,500 for the new stadium.

28 Case study Aspen Medical Industry: Healthcare and social assistance Country: Sri Lanka Product: Reinsurance Efic support: EUR 11.4 million Customer: Aspen Medical is a global provider of healthcare equipment, supplying defence, mining and resources, oil and gas, and government sectors. Need: Aspen needed support in its bid for a contract to supply goods and services as part of a global project to build a new hospital in Sri Lanka. Result: Our reinsurance agreement with other international export agencies helped Aspen win the contract for this very worthy project.

29 Case study BUNYA Productions Industry: Arts and Recreational Services Country: Product: Worldwide Producer Offset loan Customer: BUNYA Productions is a film company that was producing Satellite Boy, about a young Aboriginal boy trying to save his home from developers. Need: While commercial backing was secured, the producers faced a funding gap as the postproduction costs had to be paid upfront. Result: Our Producer Offset loan helped bridge this funding gap and allow this positive Australian film to be completed.

30 EFIC Enquiries Website: Address : Level 10, Export House 22 Pitt Street Sydney, NSW 2000 Australia General enquiries : / Fax : Stakeholders Bloomberg: EFIC Act: Annual Report: AUSTTC Corp

31 Contacts Guy Morgan Treasurer Phone: gmorgan@efic.gov.au Ben Coogan Director, Treasury Phone: bcoogan@efic.gov.au Chris Collard Director, Treasury Phone: ccollard@efic.gov.au

32 Disclaimer This material (Information) has been prepared by Efic for information purposes only. It is in summary form and is therefore not necessarily complete. It is not an offer by Efic to make available to any party any of the financial products referred to in the Information (Products) and the Information must not, in any way, be construed as specific or general advice in respect of any Products. A person or entity should seek their own advice as to the suitability of any Products for their own financial or tax circumstances. Whilst reasonable care has been taken to ensure that the Information is not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance upon the Information. In accordance with applicable exemptions, Efic is not required to hold an Australian financial services licence nor is it regulated by the Australian Prudential Regulation Authority in connection with any of the Products.