MLT (Medium-long term) export financing

Transcription

1 MLT (Medium-long term) export financing

2 MLT export financing What is MLT export financing? MLT export financing is a medium-long-term (2-10 years) financing structure for buying Hungarian goods and services, which is intended to provide financing allowing Hungarian exporters to get the consideration for their goods or services immediately after delivery. Hungarian exporters use MLT financing mainly for trade transactions including machinery export (agricultural machines, custom instruments, high-value industrial equipment) and also for financing their general contractor activities (constructing health institutions, sports facilities, power plants, educational institutions, logistics centers and residential real estates), but there can be further tailor made solutions as well. Typical financing structure of MLT export financing This facility allows requesting medium-long-term financing for up to 85% of the export contract value. Euro and US dollar are the two most typical currencies used in relation to this facility. The loan is disbursed following the (partial) performance of the export transaction 2

3 Conditions for MLT export financing 3 Collateral generally used in MLT export financing Magyar Exporthitel Biztosító Zrt. (MEHIB) provides credit insurance up to 90-95% of the financed amount, while the risks associated with the 5-10% residual value are shared among the exporter, the importer, the commercial bank and credit insurance company. Based on the risk assessment of the transaction the Bank/MEHIB may ask for further collateral. MEHIB-insurance In compliance with the requirements set forth in Government Decree No. 312/2001. (XII. 28), having a specific Hungarian origin is a precondition to the provision of the MEHIB insurance: the minimum quota for Hungarian origin is set 25% for general contractor contracts related to construction or assembly work exceeding EUR 5 million and at least 50% in all other cases. Eligible borrowers include government and municipal buyers, banks and private buyers and SPVs based on the country risk An advance payment equal to at least 15% of the commercial contract must be made available (in the form of a cash payment or bank guarantee) not later than the delivery date under the commercial contract (starting point)

4 Advantages of MLT export financing Financing the exporter off balance sheet Customized financing with a variable (LIBOR) or fixed interest rate (CIRRbased) with a tenor aligned with the return period, cheaper financing option for the importer, which offers advantages to the exporter. Neutralizing the importer s payment and country risks since the exporter gets its money from its bank when it (partially) delivers under the export contract. It also allows making export transactions involving larger volumes than those in standard business transactions if there is an appropriate buyer. 4

5 Buyer s Credit Exporter Commercial contract Buyer Risk-sharing Agreement K&H Credit Agreement MEHIB Hungarian EXIMBANK (CIRR) 5

6 Buyer s Credit What is a Buyer s Credit? A Buyer s Credit is a separate financing agreement, whereby the Bank grants a loan to the foreign not OECD country based Buyer. Structure The basis of the financing is the valid export contract ( Commercial Contract ) signed between the Hungarian Exporter and the Buyer. The main collateral of the financing is the MEHIB insurance concluded between the Bank and MEHIB on the Commercial Contract value decreased by the advance payment made by the Buyer. (Upon agreement with MEHIB, the insurance premium paid by the Exporter may be paid from the credit.) In order to allow the transaction to be insured, the conditions of MEHIB must be taken into consideration, when formulating the Commercial Contract. The Exporter will receive payment during the (partial) performance of its contract. 6

7 Bank-to-bank Credit Exporter Commercial contract Buyer Risk-sharing Agreement K&H Credit Agreement Bank MEHIB Hungarian EXIMBANK (CIRR) 7

8 Bank-to-bank Credit What is a Bank-to-bank Credit? When an export financing credit is provided directly to the Buyer s bank abroad (based in a not OECD country), it is known as a Bank-to-bank credit. Structure The basis of the financing is the valid export contract ( Commercial Contract ) signed between the Hungarian Exporter and the Buyer. The main collateral of the financing is the MEHIB insurance concluded between the Bank and MEHIB on the Commercial Contract value decreased by the advance payment made by the Buyer. (Upon agreement with MEHIB, the insurance premium paid by the Exporter may be paid from the credit.) In order to allow the transaction to be insured, the conditions of MEHIB must be taken into consideration, when formulating the Commercial Contract. Exporter receives payment during the (partial) performance of its contract directly from the Bank. The Bank provides loan to the Buyer s bank, which provides loan to the Buyer. 8

9 Supplier Credit Exporter Commercial contract, with deferred payment Buyer Insurance assigned to the Bank Financing Agreement K&H MEHIB Hungarian EXIMBANK (CIRR) 9

10 Supplier Credit What is a Supplier Credit? A Supplier Credit is a financing solution granted to the exporter in order to refinance deferrals of payment offer to the buyer within the framework of an export contract ( Commercial Contract ) Structure The basis of the financing is the valid export contract ( Commercial Contract ) signed between the Hungarian Exporter and the Buyer. Financing takes place through purchasing the receivables of the Exporter deriving from the Commercial Contract. The financing has the same terms and conditions (amount, tenor, etc.) as those applying to the deferrals of payment. The main collateral of the financing is the MEHIB insurance concluded between the Exporter and MEHIB on the Commercial Contract value (including cost of deferred payment) decreased by the advance payment made by the Buyer. (Insurance premium to be paid by the Exporter.) The MEHIB insurance must be assigned to the Bank In order to allow the transaction to be insured, the conditions of MEHIB must be taken into consideration, when formulating the Commercial Contract. The exporter will receive payment during the (partial) performance of its contract. 10

11 Why to cooperate with us? Additional financing solutions related to MLT financing Advance payment financing (usually available for bank-to bank financing transactions) Integrated approach full-package solution Pre-financing / advance payment Post-financing Pre-shipment financing for the exporter (for the period preceding the export deliveries) with customized conditions Bank guarantees required for delivery under the export contract Bonds & Guarantees Credit insurance MEHIB Re-financing / Co-financing Eximbank 11

12 Credentials 2008 Russia 2009 Russia 2009 Russia 2010 Belarus 2010 Russia Russian County Government USD 22 mln Construction of Hospital and Delivery of Medical equipments - Hungarian contractor Russian County Government USD 1.8 mln Construction of Hospital - Hungarian contractor - Russian Republic EUR 38.2 mln Construction of Hospital and Delivery of Medical equipments - Hungarian contractor - State owned Belarus bank EUR 2.3 mln delivery of LFL KT line of fluorescent lamps - Multinational Company- Russian County Government EUR 38 mln ticket in a EUR 81 mln financing Arranger / Agent Construction of Hospital and Delivery of Medical equipments - Hungarian contractor Turkey India Ghana Belarus Cengiz Insaat EUR 8.49 mln Delivery of construction equipment - Belgian contractor - Kakinada Seaports EUR 18.5 mln Dredging works - Belgian contactor - Ministry of Finance & Economic Planning EUR 9.2 mln Delivery of firefighting trucks -Belgian exporter - State owned Belarus bank EUR mln Delivery of flax harvesting machines - Belgian exporter - 12

13 This presentation has been distributed by K&H Bank Zrt ( K&H ), a subsidiary of KBC Bank NV ( KBC ). The information in this presentation is confidential and proprietary to K&H and is not to be reproduced or used for any purpose other than as general background information without the express prior permission of K&H. This presentation does not represent an offer or commitment on the part of either K&H or KBC, nor any of their affiliates to participate in any transaction. Nothing contained in this presentation is, or shall be, relied upon as a promise or representation as to the future. 13