EXIM Bank Trade Finance Solutions for Export Success! Mexican Geothermal Market Opportunities Workshop April 4, 2017
Export-Import Bank of the U.S. EXIM Bank is the official Export Credit Agency (ECA) of the U.S. Government. Mission: To support the financing of US exports to help create and sustain US jobs. Established in 1934 Headquartered in Washington, DC 12 Regional Offices nationwide Self-Sustaining Small Business Support: nearly 90% of activity
What We Do Products: Working Capital Guarantees (to fulfill export orders) Risk Protection (Export Credit Insurance) Term Financing (for buyers of equipment)
Eligibility Criteria U.S. Content Export items must be made in the U.S. Minimum 51% U.S. content is required Country Eligibility: Refer to the Country Limitation Schedule (CLS) at www.exim.gov Reasonable Reassurance of Repayment (No Start-Up Risk) Credit Standards at www.exim.gov
Working Capital Guarantee Provides a 90% guarantee of repayment (principal and interest) on short-term loans to support export activity. Assists companies in obtaining working capital to produce or purchase U.S. goods and services for export. May be Transaction-Specific, or a Revolving line of credit. No minimum or maximum amount check with your lender. Key benefits: Aggressive advances on export-related assets - Up to 75% on inventory - Up to 90% on foreign receivables (insurance may be required) - Standby L/Cs require only 25% collateral (vs. 100%)
Working Capital Guarantee
Short-Term Export Credit Insurance Benefits: RISK PROTECTION: in the event of non-payment Commercial & Political Risks (disputes are NOT covered) SALES TOOL: Empowers US exporters to offer competitive credit terms Up to 180 days (up to one-year for machinery/capital equipment) FINANCING AID: Obtain additional financing By assigning policy proceed to your lender Most banks will finance up to 90% of the invoiced amount, if insured
Short-Term Single Buyer Insurance Policy Insures a single sale or multiple sales to one buyer One-year policy period Private, Corporate-Sector Buyers: 90% Premium based on country risk, buyer classification, and credit term extended Charged on invoiced amount; payable monthly (only if there is export activity) Example: $100,000 export sale to Mexico: Up to 60-days: $840 (0.84% ) 61-120 days: $1,060 (1.06%) 121-180 days: $1,460 (1.46%) 181-270 days: $1,700 (1.70%) 271-360 days: $2,800 (2.80%) $500 minimum premium for small business exporters ($2,500 for mid-size/large corp.)
Medium-Term & Long-Term Financing Guaranteed loans made by commercial banks (U.S. or foreign) to an international buyer with a 100% unconditional repayment guarantee from EXIM Bank Used to finance buyers purchasing US-made capital equipment and/or related services Medium Term: Amounts up to $10 million; term typically up to 5-years Long-Term: Amounts over $10 million; term 5-12 years Minimum15% cash down-payment required; 85% max. financed amount Up to 30% local cost support within the U.S. scope of supply Interest rate and fees set by lender, based on 6-month Libor (currently 1.42%) EXIM Exposure Fee varies (risk-based), one-time, may be financed
Medium-Term Basic Financing Structure Sales Contract Amount: US $10,000,000 Less: 15% Downpayment: 1,500,000 Financed Portion: 8,500,000 Plus: EXIM s Exposure Fee: 261,800 (assume 3.8%; one-time fee) Total Financed Amount: $ 8,761,800 Payable in 10 equal semi-annual principal payments of US $876,180 plus accrued interest
Buyer Qualifications EXIM Bank can make a credit decision based on: 1) A corporate borrowing approach, based on the financial condition and existing business of the borrower or guarantor via analysis of: Audited financial statements, credit report, bank/trade references on borrower/guarantor Application of EXIM Bank s Medium-Term Credit Standards The corporate approach is the best approach for transactions of $10 million and under. 2) As Limited Recourse Project Finance with a special purpose company borrower and project cash flows as the primary source of repayment (most complex). Suitable for larger credits, typically above $20 million due to high due diligence costs. 3) Or, as a Structured Finance transaction with the borrower s balance sheet enhanced by special features. Can be a useful approach for loans up to $20 million
Medium Term Example: Geothermal Services Ex-Im Bank can support the financing of US equipment exports or stand-alone services contracts. POWER Engineers, Inc., an engineering consulting firm based in Hailey, Idaho, won a contract to provide design and engineering services to a 45-mw geothermal power plant in Western Turkey. Ex-Im Bank approved a $4.86 million loan guarantee Toronto-Dominion Bank made the loan, backed by Ex-Im Bank s 100% guarantee. This transaction qualified for longer repayment terms of 15-years under the Bank's special initiative to support exports of renewable energy and water projects. Approval based on corporate-borrowing approach: buyer s creditworthiness (ability to meet EXIM s Medium-Term Credit Standards)
Direct Loans Term financing made directly by EXIM Bank to an international buyer Buyer submits the application to EXIM Bank Similar structure to loan guarantee program: 15% minimum downpayment required; max. financed amount 85% of contract Generally for credits over $5 million Commitment fee of 0.5% on unused portion of the loan Must comply with US flag shipping requirements (if ocean shipment) Fixed interest rate, which varies according to the loan s repayment term: 5 to 8.5 years: 2.9% Over 8.5 to 12 years: 3.22% Over 12 to 18 years: 3.42% 3.62% For Exposure Fee indications: www.exim.gov
Direct Loan Example: Ormat Leyte Ex-Im Bank made a direct loan of $49.7 million to Ormat Leyte Co. Ltd., to build, own and operate four geothermal plants 530 km from Manila. Philippine Nat l. Oil Company (PNOC) signed a contract with Ormat to purchase power from the new plants. The commercial obligations under the contract were fully supported by Government of the Philippines. Ormat provided 25% in equity totaling $16.7 million; EXIM Bank supported the remaining 75% as the sole senior lender. Project had a number of important strengths: - supported by Government of the Philippines. - Ormat equipment has a record of reliable performance. - The engineering evaluation showed the geothermal fields to be a reliable power source, generating a high volume of steam. - Project's revenues are mostly denominated in U.S. dollars, to cover dollar-based fixed charges such as debt service.
Contact a Regional Office Near You EASTERN: Miami: 305-526-7436 New York: 212-809-2650 Atlanta: 404-815-1497 CENTRAL: Chicago: 212-353-8093 Houston: 281-721-0470 Minneapolis: 612-348-1213 Detroit: 313-230-8832 Dallas-area: 214-551-4959 WESTERN: Irvine, CA: 949-660-1341 San Diego: 858-467-7035 San Francisco: 415-705-2285 (Rob Guthrie) Seattle: 206-728-2264
EXIM Contacts for International Buyers INTERNATIONAL BUSINESS DEVELOPMENT: Kate Bishop: 202-565-3698 kate.bishop@exim.gov PROJECT FINANCE: Craig O Connor: 202-565-3356 craig.oconnor@exim.gov
Sandra Donzella Deputy Managing Director, Western Region T: 858-467-7035 Sandra.Donzella@exim.gov 2015 Export-Import Bank of the United States www.exim.gov