Developing Opportunities with Korea Eximbank (KEXIM) June, 2011 October 8, 2013
Table of Contents SECTION 1 KEXIM at a Glance 3 SECTION 2 Finance Solutions 12 SECTION 3 Infrastructure Finance 21 SECTION 4 Recent KEXIM Supported Case 31
SECTION 1 KEXIM at a Glance
KEXIM at a Glance Key Profile Specially Mandated Institution Republic of Korea 100% Ownership An Export Credit Agency mandated by Korean Government to promote export competitiveness of Korean goods and services Established in 1976 pursuant to the special act - the Export-Import Bank of Korea Act Often functioning as government vehicle to remedy market failure 100% owned by Government The Government fully owns KEXIM s capital directly and indirectly through other governmental arms KEXIM s Chairman & President is appointed by the President of Korea Board of Directors and Auditor are appointed by the Government Par with Sovereign Ratings Aa3 (Stable) A+ (Stable) AA- (Stable) 4 4
KEXIM at a Glance KEXIM as an ECA KEXIM is taking a robust role in the global export credit market alongside other leading ECAs. Korea USA Export-Import Bank of the United States UK Germany France The Export- Import Bank of Korea Italy Japan 5 5
KEXIM at a Glance Objectives Support Korean Exporters / Investors Conducting Overseas Business Strengthen the bank s role as the leading bank for global business providing a variety of financing tools Primary Objective of KEXIM Assist sponsors / investors achieve optimal financing terms under a bankable financing structure Arrange the best financing package to implement deals Enhance Cooperative Ties with International Institutions Collaborate with Multilateral Development Banks and ECAs to promote co-financing in emerging countries 6 6
KEXIM at a Glance Key Operation KEXIM s own Account Export Credit Government-entrusted Funds On behalf of Korean Government, KEXIM administrates EDCF and IKCF, both of which are SEPARATED ACCOUNTS FROM KEXIM LOANS Import Credit Overseas Business Credit Total Loans: KRW49tn(=U$44bn) (as of Dec 31, 2012) Financial Guarantee Economic Economic Development Economic Development Cooperation Fund ( EDCF ) Cooperation Cooperation Fund Fund ( EDCF ) Since 1987 Promote economic cooperation between Korea and developing countries Total Loans: KRW3.8tn Inter-Korean Cooperation Fund ( IKCF ) GUARANTEES Project Related Guarantee Total Guarantees: KRW21tn(=U$19bn) (as of Dec 31, 2012) Since 1991 Promote exchanges and cooperation between the North and South Korea Total Loans: KRW2.9tn 7 7
KEXIM at a Glance Financial Support Trend Actively Supported the Export of Heavy Chemical Industry (1976 ~ 1990 ) Positioned as the Specialized Financial Institution for International Transaction (1991 ~ 2002) 91.03 Initiated Operate of IKCF 97.12 Annual Disbursement Exceeded KRW10 tn 98.09 Increased Authorized Capital to KRW4 tn Expanded Efforts as the Core Bank for International Economic Cooperation (2003 ~ Present ) 03.12 Annual Support Exceeded KRW20 tn 09.01 Increased Capital to KRW8 tn KRW74 tn ( USD 70 bn) 10.11 Annual Support Exceeded KRW60 tn 12.12 Annual Support Exceeded KRW70 tn 76.07 Established, Authorized Capital : KRW150 bn 87.06 Initiated Operate of EDCF 87.12 Increased Authorized Capital to KRW1 tn 11 13 8 8
KEXIM at a Glance Project Finance Experience Since 1999, KEXIM has actively participated in global project finance market By Number of Projects By Commitment (USD in million) as of 13. 1 Sewage Treatment 1 Infrastructure 5 Power & Water Petrochemical 5,315 3,319 Natural Resources Development 6 Refinery 7 Power & Water 20 Refinery Natural Resources Development Infrastructure 3,296 4,475 992 Petrochemical 8 Sewage Treatment 235 Total 17,632 9 9
KEXIM at a Glance Track Records Year 2011 Year 2012 Barzan Gas Project (Qatar) Jurong Aromatics Project (Singapore) Shuweihat III Gas-fired Power Plant (UAE) Turkey Eurasia Project (Turkey) Ichthys LNG Project (Australia) Surgil Gas Project (Uzbekistan) U$ 1 Billion Sponsored by Hyundai Heavy Industries, JGC U$ 618 Million Sponsored by SK Energy, Glencore, EDB U$ 400 Million Sponsored by KEPCO, ADEWA, Sumitomo U$ 280Million Sponsored by SK E&C, YAPI Merkezi U$ 1.5 Billion Sponsored by INPEX, TOTAL U$ 1 Billion Sponsored by KOGAS, Lotte Chemical, STX Energy, UNG Year 2008 ~ 09 Year2010 Al Qatrana Gas-fired Power Plant Yemen LNG Project Ma aden Fertilizer Project Egypt Refinery Expansion Saudi Jubail Refinery Plant (Jordan) (Yemen) (Saudi Arabia) (Egypt) (Saudi Arabia) U$ 225 Million U$ 400 Million U$ 400 Million U$ 800 Million U$ 545 Million Sponsored by KEPCO, Xenel Sponsored by Kogas, Total, Yemen Gas Company Sponsored by Ma aden, SABIC Sponsored by Citadel Capital, EGPC, Hudson Sponsored by Saudi Aramco, Total 10 10
KEXIM at a Glance Track Records Global Multilateral of the Year and Deals of the Year 2012 Global Multilateral of the Year : Korea Eximbank (2008) (2009) (2010) (2012) Surgil Gas Project Ichthys LNG Project Turkey Eurasia Project Egypt ERC Project 11 11
SECTION 2 Finance Solutions
Finance Solutions Financing Program Finance Solutions Project Finance Interbank Credit Korean Exporter Export Credit(Loan/Guarantee) ( ) Credit Overseas Business Project Related Guarantee (Bonds) Interbank Export Loan Untied Two-Step Loan Pre-Shipment Credit Performance Bond Guarantee Standby LC for Equity Injection (Overseas Investment) EDCF Official Development Aid(Loan) Political Risk Guarantee 13 13
Finance Solutions Export Credit PROJECT FINANCE : EXPORT CREDIT KEXIM Direct Loan Borrower : Project Company* Financial Guarantee Interest Rate : Libor based floating rate or CIRR-based fixed rate Premium : Risk Premium subject to OECD Commercial Banks Loan Project Company Repayment arrangements on Export Credit : Up to 14 years** (Project Finance) Export Contract Requirements : Korean Contents shall be at least Korean EPC Contractor 25% of export contract value 14 14
Finance Solutions Overseas Business Credit PROJECT FINACE : OVERSEAS INVESTMENT CREDIT Borrower : Project Company KEXIM Direct Loan Interest Rate : Libor based floating rate or comparable fixed rate Financial Guarantee Premium : Risk Premium to be applied Repayment : Up to 30 years (door to door) Commercial Banks Loan Project Company Security : Mortgage, Insurance, Project A/C, Assignment of borrower s right Equity Injection Korean Sponsor Requirements under project contracts, etc. : Korean Sponsor s share retention - Completion: substantial portion should be maintained - Repayment: at least 10% 15 15
Finance Solutions Overseas Business Credit CORPORATE FINACE : OVERSEAS INVESTMENT CREDIT Borrower : Korean companies planning to KEXIM invest overseas with more than 3 years of experience in the field Currency : A foreign currency or Korean Won Loan Coverage : Up to 80% Korean Investor Re-lending Equity Foreign Company Interest Rate Repayment : Libor(or Swap) based floating rate or comparable fixed rate : Maximum 30-year repayment period Equity Injection including 3-years grace period Security :- Bank guarantee, pledge, mortgage Re-lending Foreign Investor on the borrower s local assets - Loan on credit possible 16 16
Finance Solutions Overseas Business Credit CORPORATE FINACE : OVERSEAS PROJECT CREDIT Borrower : Korean companies that conduct overseas projects without establishing KEXIM a foreign company Currency : A foreign currency or Korean Won Loan Coverage Interest Rate : Up to 80% : Libor(or Swap) based floating rate or Korean Investor Conduct Project Overseas Project Conduct Project Repayment Term Security comparable fixed rate : Maximum 30-years repayment period including 3-year grace period : - Bank guarantee, pledge, mortgage Foreign Investor on the borrower s local assets - Loan on credit possible 17 17
Finance Solutions Overseas Business Credit CORPORATE FINACE : OVERSEAS BUSINESS CREDIT Borrower : Foreign companies in which a Korean company has an equity KEXIM Direct Loan Currency share : Basically a foreign currency Coverage : Up to 100% Interest Rate : Libor(or Swap) based floating rate or Korean Investor Equity Foreign Company Repayment comparable fixed rate : Maximum 30-year repayment period Term including 3-years grace period Security - Loan on credit possible to creditworthy borrowers 18 18
Credit Line Finance Solutions Interbank Export Loans INTERBANK EXPORT LOANS Classification Short-Term Long-Term KEXIM Eligible Transactions Commodities, Services Loan Financing Tenor Less than 2 years 2-10 years Foreign Bank Sub-Loan Foreign Importer Max. Financing Amount 100% of contract amount 85% of contract amount Trade Deals Korean Exporter Interest Rate Repayment (Floating) Libor + spread (Fixed) SWAP + spread Lump-sum or Equal semi-annual installments (Floating) Libor + spread (Fixed) CIRR + exposure fee Equal semi-annual installments 19 19
Finance Solutions Financial Guarantee Financial Guarantee KEXIM provides repayment protection (Financial Guarantee) for participants in the ECA covered commercial bank s loan KEXIM covers 100% of political and commercial risk Comprehensive risk coverage during entire project life Local currency guarantee program Introduced SAR Guarantee Program in the Saudi Jubail Refinery project to invite highly liquid local banks Comprehensive Risk Coverage Guarantee Conditionality Unconditional Paid upon Request Immediately Coverage Ratio 100% Insurance Conditional (claim investigation preceded) Within 2 months 90 ~ 100% Unconditional Guarantee Cover all of the principal and interest 20 20
SECTION 3 Infrastructure Finance
I. 개도국시장의환경변화및도전과제 Infrastructure Finance Infrastructure Demand Demand for Infrastructure Project Source: MDB Working Group on Infrastructure 22 22
I. 개도국시장의환경변화및도전과제 Infrastructure Finance Infrastructure Demand Private investment commitments to PPP projects in developing countries by continent Sub Sahara East Asia MENA S. America CIS APEC Source: World Bank and PPIAF, PPI Project Database 23 23
I. 개도국시장의환경변화및도전과제 Infrastructure Finance Infrastructure Demand Demand for Infrastructure Project Source: MDB Working Group on Infrastructure 24 24
Infrastructure Finance Infrastructure Demand Private investment commitments to PPP projects in developing countries, by sector of activity 2009 US$ billions* 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1990 1995 2000 2005 2009 Telecom Energy Transport Water and sewerage Source: World Bank and PPIAF, PPI Project Database 25 25
Infrastructure Finance Project Finance Structure What is Project Finance? Source: World Bank and PPIAF, PPI Project Database 26 26
Infrastructure Finance Project Finance Structure What is Project Finance? Project Finance involves a corporate sponsor investing in and owning a single purpose, industrial asset through a legally independent entity financed with non-recourse debt. Raising of funds to finance an economically separable capital investment project in which the providers of funds look primarily to cash flow from the project to service their debt and provide returns on their equity 27 27
Infrastructure Finance Risk Management Principle of Risk Management Allocate project-specific risks to parties best able to bear them Control performance risks through incentive contracts Use market-hedging instruments (derivatives) for covering market-wide risks (interest and exchange rate fluctuations) Political Risk Regulatory Risk Technological Risk Macroeconomic Risk Environmental Risk Institutional Risk Contractual Risk Construction Risk Operational Risk Demand Risk Other Risks 28 28
Infrastructure Finance Risk Management Principle of Risk Management 29 29
Infrastructure Finance Bankability Major Concerns for Lenders : Bankability Certainty of the project cash flows for meeting debt service requirements Bankability of public sector obligations Soundness and stability of the legal framework for PPP Effectiveness and enforceability of the PPP contract and related agreements Confidence in the regulatory regime when applicable Right to step in if a project fails and availability of alternative contractors Ability of contractors to perform and the quality of their management Bankability of contractors and quality of contractor guarantees Risks that are understood, controllable, finite, and appropriately allocated Reputation impact of the project (environmental, social) Availability and effectiveness of insurance cover, where needed. 30 30
SECTION 4 Recent KEXIM Supported Case
Turkey Eurasia Project 3 Bankability & Recent Cases of KEXIM-supported Projects Project Description The project is connecting the European and Asian continent by construction of underground tunnels in Bosphorus strait. 32
Index (1987 = 100) Turkey Eurasia Project Indexed Traffic and GDP Growth, 1987 to 2009 Project Description Compound Annual Growth Rates, Existing Bridges 350 300 AADT ALL Veh AADT Lights GDP (real, 1998 prices) YEAR Bosporus Bridge AADT* FSM Bridge AADT 250 73 ~ 80 16% 200 80 ~ 89 7% 150 89 ~ 00 2% 19% 100 00 ~ 09 0% 3% 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 Year * Annual Average Daily Traffic Traffic growth historically has followed the same pattern as economic growth, albeit at a faster rate. Growth has tailed off in recent years as volumes approach capacity limits of the bridges. 33
Turkey Eurasia Project Project History 2008 2009 2010 2011 2012 2013 2017 December 2008 - Turkish Korean Joint Venture (TKJV) awarded the BOT concession by DLH (General Directorate of Railways, Seaports and Airport Construction) September 2009 KEXIM issued LOI to the ATAS( previously TKJV ) June 2010 Lenders group started due diligence and negotiation February 2011 Signing of the Implementation Contract(ATAS, Gov t) 2011 Negotiation and documentation June 2012 KEXIM s board approval March 2013 Financial Close & First drawdown 2017 Estimated start of operational service 34
Turkey Eurasia Project Project Structure Structure Ministry of Transportation, Maritime and Communications Turkey Treasury Shareholder Agt Implementation Contract ICDA DAA Korean Sponsor Turkish Sponsor Project Company (ATAS) Finance Agt K-EXIM K-SURE EPC Contract O&M Contract Commercial Bank EPC contractor (Sponsor JV) O&M contractor EIB EBRD 35 35
Disclaimer This presentation has been prepared by Korea Eximbank and is being shared with you solely for Information purposes. Korea Eximbank does not make any representation or warranty as to the accuracy or completeness of this information. These presentation materials may not be reproduced or disclosed to any person or entity in whole or in part, or used for any other purposes (except for this discussion today), without the prior written consent of Korea Eximbank. 36 36
Thank You! Jin Ha Lee Deputy Director Infrastructure Finance Department jinhalee@koreaexim.go.kr 37