Financial Instruments

Transcription

1 Financial Instruments 1 Financial Instruments 60 2 Prominent Initiatives in Recent Years 68 59

2 1 Financial Instruments Export s Export loans are provided to overseas importers and financial institutions to support finance exports of Japanese machinery, equipment and technology mainly to developing countries. In particular, products such as marine vessels, power generation facilities and other types of plant equipment incorporate a large amount of advanced technology, and their export contributes to enhance the technological base of Japanese industries. Further, Japanese shipbuilding and plant facilities industries have a broad range of supporting industries including mid-tier enterprises and SMEs producing parts and components. Export loans JBIC provides are also expected to positively contribute to the business of these Japanese companies. Export loans are also available to developed countries in eligible sectors (see note). Terms and conditions of export loans are determined based on the OECD Arrangement. In principle, the loan amount should not exceed the value of an export contract or technical service contract, and excludes down payment. While local costs cannot, in principle, be applied to the loan, such costs may be covered provided that the amount is within the scope prescribed by the OECD Arrangement. (Note) Eligible Sectors of Export s in Developed Countries (As of October 31, 2012) [Integrated Infrastructure System Projects] Railways (high-speed, inter-city projects and projects in major cities), water business, biomass fuel production, renewable energy power generation, nuclear power generation, power transformation, transmission and distribution, highly efficient coal-fired power generation, coal gasification, carbon capture and storage (CCS), highly efficient gas-fired power generation and smart grid [Other Export Transactions] Ships, satellites, aircrafts, medical positron beam therapy equipment (B/L)* 2 Financial institution, etc., in foreign country (B/C)* 1 s Japanese exporter(s) Exports of plants, etc. Importer(s) in foreign country(ies) *1. to foreign importers (Buyer s Credit or B/C ). *2. to foreign financial institutions (Bank-to-Bank or B/L ). Support for Export of Transport Infrastructure Due to the expansion of the global rolling stock market, many manufacturers in Europe, Asia, North America and elsewhere are vigorously engaged in business activities to win orders for transport infrastructure. In Cairo, the capital of Egypt, chronic traffic congestion caused by excessive concentration of the population is posing major problems. It was against this backdrop that JBIC provided support for the export of Japanese companies by financing the procurement of a fleet of rolling stocks mainly manufactured by Japanese companies for the project of constructing Line 3 of the Greater Cairo Metro Network that links the city center with Cairo International Airport. Supporting Overseas Business Development of Japanese Companies As the fast-paced growth in the Indian economy in recent years has caused chronic power shortages, JBIC provided export credit, through India s largest private sector bank, to finance the export to India of thermal power generation boiler/turbine sets that embody supercritical pressure coal-fired power generation technology that is expected to reduce the burden on the environment. This loan supports overseas infrastructure business development by Japanese companies as well as contributing to India s power supply capacity. An image of Metro Line 3 passenger cars (courtesy of The Kinki Sharyo Co., Ltd.) 60

3 Import s Import loans support imports of strategically important goods including natural resources. They are extended to Japanese importers or foreign exporters. As Japan is poorly endowed with natural resources, stable imports of natural resources over the long term are one of the key factors underpinning domestic economic activity. Import loans finance the development and import of energy resources, including oil and LNG, and mineral resources, including iron ore, copper and other rare materials. In addition to natural resources, JBIC provides a guarantee facility for goods and services essential to the sound development of the Japanese economy, such as for the import of aircraft. Products Eligible for Import s (Natural Resources) Oil, petroleum gas, LNG, coal, uranium, metallic ore, metals, mineral phosphate, fluorite, salt, lumber, wood chip, pulp, and other materials Japanese Importer(s) Imports of natural resources Foreign exporter(s) Financing to Ensure Stable Supplies of Oil from Overseas The United Arab Emirates (UAE) has been a stable crude oil exporter for Japan for more than 30 years. In addition, Abu Dhabi allows the entry of foreign-affiliated companies to operate oil fields on the basis of concession agreements. Thus, the UAE is an important country for Japan s resource strategy. JBIC signed MOUs for the further strengthening of its comprehensive and strategic partnership with Abu Dhabi National Oil Company (ADNOC) in Abu Dhabi, which is a hub of oil and gas production in the UAE. JBIC further provided import loans for ANDOC, thereby contributing to securing a stable supply of energy resources to Japan. 61

4 Overseas Investment s Overseas investment loans support Japanese foreign direct investments. They are extended to Japanese companies (investors), overseas affiliates including joint ventures where Japanese firms have equity interests and governments or financial institutions that make equity investments in or extend loans to such overseas affiliates. Direct loans to Japanese companies are intended for midtier enterprises and SMEs, as well as for projects aimed at developing or securing interests in overseas resources that are strategically important to Japan, or for projects to assist with merger and acquisition (M&A) activities and other agreements (including to large firms). Moreover, JBIC is able to provide two-step loans (TSLs) to support the overseas business deployment of Japanese companies, including mid-tier enterprises and SMEs, as well as TSLs intended to support their M&A activities. JBIC is also able to provide short-term loans for overseas business operations when bridge loans are required to fill the financing gap before it offers long-term loans. JBIC is further empowered to extend investment loans for projects in developed countries for eligible sectors (see note). (Note) Eligible Sectors of Overseas Investment s in Developed Countries (As of October 31, 2012) Railways (high-speed, inter-city projects and projects in major cities), water business, renewable energy power generation, nuclear power generation, power transformation, transmission and distribution, highly efficient coal-fired power generation, coal gasification, carbon capture and storage (CCS), smart grid, development of telecommunications network, biomass fuel production, highly efficient gas-fired power generation, aircraft maintenance and sales, M&A activities, etc. Government, financial institution, etc., in foreign country, Japanese bank s Japanese firm s and/or equity investment Japanese affiliate(s) s s investment Project(s) in foreign country(ies) Joint venture partner(s) Financing for Japanese Companies Investing in Natural Resource Development Copper is an important mining resource used in a wide range of applications, such as electrical cables, automobiles and building materials, though Japan is currently wholly dependent on imports for its supply of copper concentrates. JBIC is providing the financing for the Caserones Copper Mine project in Chile, the first 100% Japan-owned large-scale overseas copper mine development. This project secures a steady supply of copper concentrates to Japan, and is strategically important in terms of both the acquisition of mine development and operational know-how overseas by Japanese companies, as well as the securing of mineral resources for Japan over the medium to long term. Supporting Japanese Manufacturers Overseas Business Deployment There has been increasing needs for mechanization of agriculture, due to economic growth, income growth among agricultural households and a decrease in agricultural population inthailand, which has about six times more rice paddy fields than Japan. As a result, the agricultural machinery market has been rapidly growing. JBIC extended a loan to YANMMAR Co., Ltd., a Japanese agricultural machinery manufacturer, for funding its sales of agricultural machinery in Thailand. The loan is expected to support Japanese companies to expand their business in Thailand, the economy of which is on a path of sustained growth. 62

5 Untied s Untied loans are financing basically to developing countries necessary to implement projects and import goods, or for such countries to level their international balance of trade, or stabilize their currency. s are not conditional on procurement of equipment and materials from Japan. Capital procured from untied loans is used to: Secure stable supplies of energy and mineral resources to Japan; Promote business activities of Japanese companies; Maintain and expand trade and direct investment from Japan; Finance projects having significant effect on global environmental preservation; and Finance projects maintaining international financial order Untied loans may be categorized into two types: project loans and policy adjustment loans. Project loans are used to finance projects for developing economic infrastructure, including power, telecommunications and transportation facilities, and for developing natural resources. Policy adjustment loans support economic management, including structural adjustment in the overall economy and in individual sectors. A project loan may take the form of a TSL, which supports the promotion of exports and the development of supporting industries in a developing country through its official financial institution. Drawing on its strong ties with developing countries fostered by the provision of untied loans, JBIC provides indirect support for Japanese firms business activities in developing countries by helping solve disputes that arise between developing country authorities and Japanese firms. Government, financial institution, etc., in foreign country Project(s) in the recipient country(ies) Foreign importer(s) Imports of equipment and technology Exporter(s) Supporting Renewable Energy and Energy Conservation Projects JBIC provided a loan for Denizbank A.S., one of the leading commercial banks in Turkey, to support the funding of its environment-related projects, such as renewable energy and energy efficiency improvement. This financing is provided as part of JBIC s GREEN (Global action for Reconciling Economic growth and ENvironmental preservation) operations ( see p. 69). The Turkish government ratified the Kyoto Protocol in August 2009 and has been making active efforts to mitigate climate change. The loan is expected to contribute to mitigating greenhouse gas (GHG) emissions, as well as disseminating advanced environmental technologies to Turkey. 63

6 Participations are capital contributions to the companies which Japanese companies have equity stakes set up by Japanese companies to undertake overseas projects and funds where Japanese companies perform a significant role. In principle, equity take the following forms. Japanese firms make equity investment in an overseas project Japanese firm(s) participation Overseas project Japanese firms participate in fund (and perform such major role as general partner in their management and investment decisions) Japanese firm(s) Major role participation Fund Other investor(s) Japanese firms acquire equity interests in a foreign firm to form business alliance Japanese firms form a consortium and participate in an international fund Business alliance Japanese firm(s) Foreign firm Japanese firm(s) Fund Other investor(s) participation consortium participation Participation in a Fund for Growth Companies in Emerging Nations JBIC has invested in a fund that targets growth companies in Viet Nam. This private equity fund, managed by Japanese companies, invests in Vietnamese companies that need capital and technology to grow, and provides them with support in such areas as alliances with Japanese companies, with the aim of enhancing their corporate value. In addition to supporting growth of Vietnamese companies, the fund contributes to promote business deployment of Japanese companies in Viet Nam, which is highly expected as a promising manufacturing base and consumer market for them. Medical exam buses owned by a portfolio company of the fund 6

7 s In addition to loans and equity, JBIC also provides support through its guarantee facility. s are provided for loans extended by private financial institutions, bonds issued by governments of emerging nations or overseas Japanese companies, and currency swap transactions. JBIC also issues reassurance for guarantees from export credit agencies in other countries. s for Imports of Manufactured Products JBIC has a guarantee facility for the borrowings made by Japanese firms to finance the import of aircraft and other manufactured products that are important for Japan. Foreign exporter(s) Import of products Private financial institution, etc. Japanese importer(s) s for Corporate Bonds Issued by Japanese Affiliates JBIC supports Japanese affiliates operating overseas by providing guarantees for the bonds they issue in local capital markets. Counter guarantee Sub guarantee Investor(s) Issue of bonds Japanese firm (Parent company, private financial institution, etc.) s Japanese affiliate (Issuer) s for Co-financing, Overseas Syndicated s and Public Sector Bonds s to developing countries involve, among others, currency conversion, transfer and country risk. s that JBIC issues to cover such risks will enable Japanese private financial institutions to provide medium- and long-term financing for developing countries, supporting developing countries to bring in private capital and facilitating private firms expanding international business activities. Private financial institution, etc. Investor(s) Issues of public bonds, etc. Government, etc., in foreign country for Currency Swaps JBIC provides guarantees for swap transactions to support the local currency financing of overseas infrastructure projects, etc., undertaken by Japanese firms. Japanese firm(s) Operation Investment Swap counterparty in overseas Currency swap contract Private financed institution Local currency loan Overseas infrastructure projects,etc. 65

8 Counter s for Export Credits When Japanese exporters export machinery and equipment with other country s firm(s), JBIC provides a counter guarantee for the guarantee provided by that country s Export Credit Agecy (ECA), thereby participating in a multilateral mutual guarantee scheme. Bridge s JBIC provides short-term financing for governments of developing countries to meet their foreign currency needs for external transactions when they face balance-of-payment difficulties. Counter guarantee Foreign ECA Private bank(s) Japanese firm(s) Foreign firm(s) Export Foreign importer(s) Government, financial institution, etc., in foreign country (Conditionality) s from the IMF, World Bank, etc. Import or other external transaction(s) Acquisition of Assets and Public and Corporate Bonds When JBIC provides export loans, import loans, overseas investment loans and untied loans, JBIC can also provide credits, in addition to providing loans and guarantees, by purchasing loan assets and acquiring public and corporate bonds 1 issued by borrowers for funding. The objective of such operations is to promote private financial institutions loans in international finance and Japanese firms funding in international capital markets. 1. The scope of assets and securities acquired includes public bonds, corporate bonds, debt securities and trust beneficiary rights. Research and Studies JBIC conducts research and studies on individual projects during their initial stage, as well as research and studies focused on specific regions or industry sectors that may have a bearing on specific projects occasionally. This is an effective means of uncovering potentially favorable projects, and supports to increase exports of materials and services from Japan for that project, as well as to expand opportunities for participation by Japanese companies. Research and studies are conducted at each stage necessary for realization of the project, including creation of a master plan for an individual project, conducting of prefeasibility and feasibility studies (Pre-F/S, F/S), front end engineering design (FEED), and studies of regions and industry sectors linked to specific projects. After the research and studies are completed, follow-up reviews are conducted at least once each year to confirm the progress of the project. Research and studies are conducted in the following order. 1. Selection of a research and study subject 2. Selection of the contractor to conduct research and studies 3. Conduct of the research and studies. Completion of the research and study report 5. Follow-up 66

9 Securitization, etc. JBIC provides support for securitization, etc. in order to supplement and encourage the activities of private financial institutions. 1. Securitization (s) In cases where special purpose companies or trust companies issue asset-backed securities or other financial products with loans or other assets as collateral, JBIC guarantees the payment of such asset-backed securities to reduce the country and structure risks, thereby supporting the issuance of bonds in the emerging capital markets. Originator Private financial institutions, etc. s Transfer of loans 2. Securitization (Acquisition of Securities) JBIC supports bond issues by acquiring a portion of the assetbacked securities issued by special purpose companies or trust companies with loans or other assets as collateral. JBIC s acquisition will contribute to the smooth issuance of bonds, as well as stimulates the market by circulating the acquired bonds back into the market when market conditions allow it. Special purpose company Issue of assetbacked security Purchase of assetbacked security Obligor Overseas Japanese affiliates Investors (in Japan and overseas) The above diagrams depict the schemes where special purpose companies (SPCs) are used, but the clients can also use schemes where trusts are used or JBIC acquires or provides guarantees for assets backed by securitization. 3. Securitization of Receivables, etc. JBIC provides guarantees for the receivables and other monetary claims held by overseas subsidiaries of Japanese companies, in order to facilitate the purchase of such receivables by banks. JBIC is also able to provide guarantees for securities issued by special purpose companies (SPCs) or trust companies to secure monetary claims they have acquired from overseas Japanese subsidiaries. Overseas Japanese affiliates Proceeds Assignment of account receivable Accounts receivable, etc. Overseas Local companies Private financial institutions SPC or Trust Asset-backed securities Proceeds Investors Securitization of Automobile Financing Receivables The automobile market in the United Arab Emirates (UAE) is expected to continue to grow and, with Japanese automobiles accounting for a 60% share of the market, it is considered a promising market for Japanese automakers. JBIC acquired and provided guarantees for securitized notes backed by auto loans originated* by Emirates NBD PJSC (ENBD), the largest bank in the UAE in terms of assets. This was the first auto loan securitization in the UAE. With the payment guarantees for the securities sold to investors, JBIC minimized the country and structure risks, and provided new investment opportunities to the market. This deal supports smooth provision of auto loans by local banks, thereby contributing promote steady growth in the UAE automobile market and serving to uphold and expand an important market for Japanese automobile manufacturers. (Note) The Originator is the initial owner of the securitized assets. 67

10 2 Prominent Initiatives in Recent Years Financial Instruments 2. Prominent Initiatives in Recent Years E-FACE Initiative to Finance Strategic Projects JBIC established E-FACE (Enhanced Facility for Global Cooperation in Low Carbon Infrastructure and Investment) 1 in April 2011, in order to offer proactive support for the overseas deployment of integrated infrastructure systems and other strategic projects, while also mobilizing private sector funding to the greatest extent possible. This facility is intended to finance the overseas deployment of integrated infrastructure systems, to promote investment in such projects as M&A deals Supporting for the Overseas Deployment of Integrated Infrastructure Systems Implemented by Japanese Companies Clean energy projects (renewable energy, etc.) Water projects Project Eligible for Support under the E-FACE Initiative Rail projects (inter-city, metropolitan transit) Smart grid-related projects and large-scale acquisitions of natural resource interests, and to provide risk capital for energy conservation and new energy projects, as well as projects in Asia. 1. This Facility was launched to develop and expand the JBIC Facility for Asia Cooperation and Environment (FACE), which supported Asian projects, primarily in the sectors that would contribute to mitigating climate change, infrastructure development projects, and the Leading Investment to Future Environment Initiative (LIFE Initiative), which aimed to support environmental investments undertaken by governments and private sector companies in Asian and other developing countries. JBIC Enhanced Facility for Global Cooperation in Low Carbon Infrastructure and Investment (E-FACE) Promoting Investment in M&A Projects M&A projects Large-scale resource interest acquisition projects Supporting Environment Sector and Asian Projects, etc. Energy efficiency/ Alternative energy projects Projects in Asia s s s /s /s s Private Sector 68

11 GREEN Operations JBIC launched GREEN (Global action for Reconciling Economic growth and ENvironmental preservation) operations in April Previously, JBIC s financing operations had centered mainly on projects directly aiming to maintain and improve international competitiveness of Japanese industries, such as projects involving Japanese firms investment and machinery/ equipment exports. Accordingly, projects dedicated solely to preservation of the global environment were so far not eligible for JBIC support. Launching GREEN operations enabled JBIC to focus its financing on projects seeking to preserve the global environment, such as those that materially reduce greenhouse gas (GHG) emissions, while propagating advanced Japanese environmental technologies across the world. To help implement GREEN operations, JBIC also established the Guidelines for Measurement, Reporting and Verification of GHG Emission Reductions in JBIC GREEN operations (J-MRV Guidelines), which set out the basic concepts and procedures for the J-MRV Guidelines. Promoting the overseas business having the purpose of preserving the global environment, such as preventing global warming s / s Eligible Entity: Eligible Projects: Private Flows Foreign government, governmental agencies or local governments, public enterprises such as utilities operating closely with government, Foreign Financial Institution, multilateral Institution. 1. Favorable impact on preservation of the global environment, such as significantly reducing GHG emissions. 2. Accepting JBIC-MRV* process on the effect of the environmental preservation. (e.g. Energy efficiency improvement, Renewable energy, etc.) * JBIC original methodology for Measurement, Reporting and Verification. Financial Instruments 2. Prominent Initiatives in Recent Years and Acquisition toward Tokyo market Enhancement (GATE) Facility JBIC launched the new and Acquisition toward Tokyo market Enhancement (GATE) facility for supporting samurai bond 1 issuance in April This enables JBIC to acquire samurai bonds where appropriate in addition to providing partial guarantees for samurai bond issues. The GATE facility thereby helped foreign governments and government agencies to consistently raise funds in the Tokyo market. Since May 2009, JBIC has stood behind the self-help efforts of Asian countries to regain access to international markets with the Market Access Support Facility (MASF), which provides guarantees to samurai bonds. Under this facility, JBIC provided guarantees for samurai bonds issued by these countries that are temporarily unable to raise funds through sovereign bond issuance in international financial markets due to the market turmoil caused by the global financial crisis. Under MASF, JBIC guarantees supported samurai bonds issued by the Indonesian and Philippine governments. Responding to disruptions in financial order in the international economy, JBIC also supported samurai bonds issued by the Colombian and Mexican governments. The GATE facility, which extended and enhanced the functions of the MASF, backs up bond issues by foreign governments and government agencies in the Tokyo market. It is thereby expected to help attract foreign bond issuers to the Tokyo market; induce them to become regular participants in the Tokyo market; and expand and diversify the range of investment opportunities available to Japanese investors, which leads to an increase in activities in the Tokyo samurai bond market. 1. Samurai bonds are yen-denominated bonds issued in the Japanese financial market by foreign issuing bodies, such as governments and companies. The investors pay in Japanese yen to purchase these bonds when they are issued. 69

12 Financial Instruments 2. Prominent Initiatives in Recent Years Promoting Efforts for Africa Following the Japanese government s pledge of $2.5 billion in financial support for Africa over the next five years during the Fourth Tokyo International Conference on African Development (TICAD IV) in May 2008, JBIC has been making vigorous efforts to support business investments in Africa. In April 2009, the JBIC Facility for African Investment (FAI) was established to support projects undertaken by Japanese companies for developing and expanding their business in Africa by drawing on JBIC s equity participation, guarantee facility, etc. FAI allows JBIC to make equity in Japanese companies individual projects in African countries and provide guarantees for the loans to these projects conducted by private financial institutions. JBIC continues to be committed to actively supporting Japanese companies for expanding business operations into Africa by drawing on this facility or other JBIC financing facilities and schemes. Supporting Export of Textile Manufacturing Machinery to Angola by Japanese Companies Expanding Local Currency s To date, JBIC has responded to local currency funding needs of Japanese companies in developing countries by providing: (1) loans through obtaining funds in swap transactions (e.g. South African rand and Thai baht); (2) loans by obtaining funding through local currency bond issues (e.g. Thai baht); (3) guarantees for local currency corporate securities issued by local Japanese subsidiaries or affiliates: () two-step loans to the banks in developing countries (loans provided by JBIC in hard currency to banks in developing countries are on-lent in local currencies). Following the promulgation and coming into effect of the JBIC Act in May 2011, JBIC is empowered to provide guarantees for swap transactions between private financial institutions to meet funding needs associated with business operations and projects of Japanese subsidiaries and affiliates. Under the Japanese overseas deployment of integrated infrastructure systems project operated/advanced by public and private sector, needs of local currency funding is increasing in developing countries. JBIC will continue to provide support by drawing on appropriate financial facilities and schemes based on specific needs of Japanese companies. 70