Export-Import Bank of the U.S. Uduak Essien, Sr. Project Officer

Transcription

1 Export-Import Bank of the U.S. Uduak Essien, Sr. Project Officer Platts Caribbean Energy Conference 2013

2 Role of Ex-Im Bank Assist in financing exports of goods and services to international markets Act as lender of last resort not to compete with private-sector lenders to fill gaps in trade financing Assume credit and country risks that private sector will not Help to level the playing field among international competitors 2

3 Divisional Authorizations by Region (1993 present) Oceania 2% Caribbean 2% North America 1% Sub-Saharan Africa 1% MENA 13% Latin America 39% Europe 18% Asia 24% 3

4 Divisional Authorizations by Sector (1993 present) Manufacturing, 3.6% Petrochemical, 4.1% Wind, 5.5% Other, 2.3% Construction, 0.9% Nuclear, 0.5% Mining, 5.5% Oil & Gas, 36.8% Solar, 7.3% Telecom, 9.1% Power, 24.5% 4

5 Millions of USD Project and Structured Finance Activity (FY2000-FY2012) $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $ Project Finance Year Structured Finance 5

6 Products: Initial Bidding/Financing Proposal Letter of Interest Fee: $50 online, $100 mail/fax Two types ostandard 5-7 business days oproject Finance 7-10 business days Competitive Letter of Interest Fee: $1, business days Preliminary Commitment Fee: 0.1% of total project size, or $25, business days 6

7 Products: Supplier Financing Working Capital Guarantee Loan made by commercial bank, 90% guaranteed by Ex-Im Bank Advance rates oinventory: up to 75% oforeign accounts receivable: up to 90% Supply-Chain Finance Guarantee Exporter sells accounts receivable to commercial bank Ex-Im Bank provides 90% guarantee on eligible invoices Insurance Short-term up to 180 days, sometimes 360 days Medium-term up to five years and $10 million 7

8 Products: Buyer Financing Direct Loan Ex-Im Bank as lender Commercial Interest Reference Rate ( CIRR ) based on U.S. Treasuries; rate changes on 15th of each month Fixed-rate for life of loan U.S. dollar-denominated Comprehensive Guaranteed Loan Commercial bank as lender Bank sets interest rate Typically floating-rate Hard currency-denominated (e.g., EUR, CAD, AUD, GBP, ZAR, CHF, etc.) 8

9 Buyer Financing: Trade Finance vs. Structured Finance Customer Product Trade Finance Division - Sovereign (with MOF guarantee) - Corporates - Banks - Insurance - Guaranteed loan Structured Finance Division - Public nonsovereign entities - Corporates - Banks - Direct loan - Guaranteed loan Repayment term <7 years Usually >7 years USD amount Usually up to $10 mn >$10 mn Structures - Corporate finance - Bank guarantee - Sovereign direct lending - Corporate finance - Structured corporate finance - Project finance 9

10 Structured (Corporate) Finance What do we mean by structured finance? Creditworthiness based on three years of the entity s financial statements PLUS future projections associated with the capital expenditure PLUS one or more credit enhancements, for example: Reserve funds and other restricted accounts, Payment priorities and cash control, Funding tied to milestones, Dividend release conditions, and/or Collateral security. 10

11 Project Finance Key components New company, usually special-purpose vehicle(spv) Sponsor equity Debt, usually long-term Future cash flows Contracts 11

12 Project Finance: Basic Structure Essential structure can appear simple, but shows that a contract must support every relationship. Host government Sponsor Supply Contracts SPV Borrower Off-take Contract EPC, Construction Contract Operations & Maintenance Contract

13 Project Finance Principles: Credit Considerations Ex-Im Bank considers the following when evaluating credit: Reasonable assurance of repayment and risk-sharing with other parties, Strong, creditworthy sponsors, Commercially-proven technologies, Structured transaction through contractual arrangements, and Robust debt coverage. 13

14 Ex-Im Bank Guidelines Country Limitation Schedule Interagency risk rating Content Lesser of (i) 85% of U.S. contract or (ii) 100% of U.S. content Financing basis Tied to U.S. content Local-cost financing of up to 30% of the U.S. export value No country or transaction limits Environmental/Social impact Carbon intensity 14

15 Ex-Im Bank Guidelines (cont.) Adverse economic impact Iran trade sanctions U.S. Maritime Administration ( MARAD ) shipping (cargo preference) 15

16 OECD Guidelines Repayment term High Income OECD countries: 5 years; 8.5 years with notification Other countries: 10 years All countries Power projects: 12 years Project finance: 14 years Renewable energy: 18 years Co-finance Available for plain-vanilla, corporate finance transactions Otherwise, parallel finance 16

17 Exposure Fee* Examples Country Fee Level Low Range With 4 Risk Increments** Dominican Republic 5 12% 25% Jamaica 7 22% 28% T&T and Barbados 2 3% 10% Bahamas 3 5% 13% St Kitts & Nevis 6 16% 26% *assuming 12 year power project **range can go significantly higher 17

18 Country Limitation Schedule (CLS) as of Dec 2012 Country <1 yr. 1 to 7 yrs. 7 yrs. < <1 yr. 1 to 7 yrs. 7 yrs. < Notes Public (Sovereign) Private (Non-Sovereign) Antigua/Barbuda X X X 1,4,13 Dominica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and Grenadines 1 Dominican Republic 3,6a Grenada X 1,5,13 Haiti X X X X X X 10,13 Jamaica, Trinidad & Tobago 6a 18

19 Quick Overview of Notes to CLS #1.. #3. Prior to accepting an application, Ex-Im Bank will require an indication of host government support for the application. #4.. #5. Support for public sector transactions is typically limited to deals which commit the full faith and credit of the government. #6. Under ST Insurance Policies, coverage under Discretionary Credit Limits and a Country Limits of Liability shall usually be the lesser of the limits authorized in the policy or: a. $50,000 b. $100,000 #10. Public sector deals are subject to MoF notification that the deals is of the highest priority and would conform with IMF program limits... #13.Where the CLS indicates support is not available, Ex-Im Bank can still consider financing arrangements that eliminate or externalize country risks. 19

20 Questions? Ex-Im Bank 2013 Annual Conference April 4-5 Omni Shoreham Hotel Washington, DC 20

21 Contact Information for Structured Finance Division Uduak Essien, Sr. Project Officer Steven Mayo, Business Development 21