Ex-Im Bank Webinar: Competitive Financing for Your Foreign Buyers


Uploaded by EximBankofUS on 14.11.2012

Transcript:
MR. AUGUSTINE GRACE: Welcome to Ex-Im Bank's Webinar. This is the fourth in a series of
four webinars conducted here at the bank. This webinar will be recorded and can be found
at www.exim.gov. My name is Augustine Grace. am a senior business development officer,
senior manager, and director of veteran's relations here at the bank. We will be making
a 25 minute presentations, basically covering the loan and guarantee program here at Ex-Im
Bank. We want to allow for questions at the end. If you want to send us a question, simply
go to the lower right-hand corner of your screen--to the question box--to type and submit
your questions. We will respond to them at the end of the presentation. I would like
to introduce you to today's speaker, Mr. Kyle Jackson. Kyle is a trade finance officer in
the Trade Finance Division here at headquarters. He has been with the bank for well over ten
years and has had various--held various positions here throughout the bank. He is our senior
instructor at our two-day training that we conduct here every other month. I will now
turn the presentation over to Kyle. MR. KYLE JACKSON: Good afternoon. As Gus has noted,
uh, my name is Kyle Jackson and I am a loan officer--trade finance officer--here at Ex-Im
Bank, and today we will be covering Ex-Im Bank's medium and long-term financing programs.
A quick review of the agenda will show that the presentation is divided up into approximately
four sections. First we will cover the general policies that either impact or govern the
financing Ex-Im Bank participates in, then we will talk about the medium-term financing,
then our long-term financing program, and then, ultimately, how to apply. Ex-Im Bank
is a member of the Organization of Ec--of Economic Cooperation and Development. This
organization governs the way export credit agencies can support their indigenous exporters
when providing financing for their international buyers. The concept behind the OECD arrangement
is to create what is called a level playing field, that being that no exporter is advantaged
by the financing they are offering their buyer, in that transactions and export orders will
be won or lost on the qualitative nature of the product or service that is being offered.
The OECD arrangement governs various aspects of the financings. These include the amount
of the cash payment, the interest rate, the maximum repayment term on the loan, level
principal payments throughout the life of the loan, the starting point of the loan,
as well as the fee each export agency can charge for taking the risk on the transaction.
Additional policies here at Ex-Im Bank include our content policy-which governs the amount
of what we di--identify as eligible foreign content which is allowable in products that
are manufactured or sourced from the United States--local costs, military, used equipment,
and, obviously, fees charged by the bank. U.S. content. As an agency of the United States
government, Ex-Im Bank will only finance a majority of those goods and services that
are produced or sourced from the United States. However, we do recognize that in today's global
environment it is very difficult to have a product that is solely produced in the United
States, and that would include looking at raw materials used to manufacture that product.
Therefore, we do allow for a certain degree of what we call eligible foreign content to
be included in that product. Eligible foreign content is defined as any item that is sourced
from overseas that is brought into the United States or into U.S. Territories, either assembled
into a U.S. item and/or a stand-alone item that is then exported out. We will allow for
approximately one five--that is, 15%--of eligible foreign content to be included in Ex-Im Bank's
financing. Anything greater than 15% would impact the Ex-Im Bank financing structure.
Local cost financing. Local cost is the cost the exporter would incur in the country where
its borrower is located. For instance, if you are manufacturing or installing a piece
of machinery in a foreign country and you need to actually hire local labor and/or brick
and mortar to build that m-piece--build a factory and/or to install that machine, well,
you are not going to actually bring over U.S. labor to do that. You are going to do that
in your--in the country of your borrower. We will allow for up to 30% of what we consider
to be the net U.S. contract value to be financed in local cost, and that is the ability to
actually finance labor and/or services that are sourced outside the United States but
are supporting the U.S. project or the U.S. product. Eligible requirements for medium
and long-term financing are different, but ultimately Ex-Im Bank requires for the local
costs to be a part of the exporter's responsibilities and it should be codified in the export contract.
Military. Ex- Im Bank is prohibited from supporting military goods and/or sales to military entities
overseas. There are, however, three exceptions to this rule: We will support humanitarian
exports, such as items that are going to a military clinic overseas, and that clinic
perhaps services its civilian population; goods that are being used to support drug
interdiction, such as the sale of helicopters and/or vehicles that will used to patrol the
border to prohibit the, uh, smuggling of drugs; and what we call or identify as dual-use items,
and that would be items that are purchased by a military entity but have a predominant
civilian application. An example here would be air traffic control radars purchased by
a foreign borrower--perhaps a foreign military organization--however, the air traffic control
radars themselves will be utilized to manage the overflight of civilian aircraft. So although
those items are quote, unquote, "operated," and be--were purchased by a military entity,
they are utilized primarily for a civilian application and thus they have a dual use.
Used and refurbished equipment. Ex-Im Bank recognizes that there is a very large market
for used and refurbished equipment that has been originally manufactured here in the United
States. Therefore, we do support used and refurbished equipment. However, to have your
equipment supported by Ex-Im Bank, we do ask that that equipment meet certain eligible
criteria. First and foremost, we say that it must be originally manufactured in the
United States. Second, we say prior to approaching Ex- Im Bank for export, that equipment must
of, of been domiciled in the United States for a period of minimally one year, and that
is, you cannot purchase U.S. manufactured equipment abroad, bring it into the United
States with the intent of approaching Ex-Im Bank for financing. If you do do that, then
the equipment again must be domiciled in the United States minimally for one year. If it
is not domiciled in the United States and/or if that equipment has--was not originally
manufactured in the United States, then it will impact the amount of financing available
from Ex-Im Bank. If neither one of those criteria are met, Ex-Im Bank would view the production
costs of that equipment as eligible foreign content, meaning that at, at a production
level, that equipment cannot exceed 15% of the amount of financing you are requesting
from Ex-Im Bank. If it does, then Ex-Im Bank would have to reduce the amount of financing
available to your buyer. We are now going to discuss Ex-Im Bank's medium-term financing
program. Ex-Im Bank has three products to support medium-term financing. Medium-term
financing is financing that has a repayment term of anywhere from five to seven years
and does not exceed $10,000,000. The three products we have to support medium-term financing
are export credit insurance, loan guarantees, and direct loans. It is important to note
that Ex-Im Bank does very few medium- term direct loans. Key features, again, of our
medium-term policy--and I discussed some of these earlier--are that the maximum financed
amount would be $10,000,000, the maximum repayment term is typically five years--in exceptional
circumstances we will consider seven years--we require minimally a 15%--one five percent--cash
down payment, and we will cover 100% of the remaining balance of principal and interest
up--which would include 85% of the export value. Medium-term insurance--or what was
referred to as export credit insurance on the previous slide--is an extension of credit
made to a foreign buyer to procure U.S. capital equipment and/or services. It generally involves
a bank--although medium-term insurance can be extended to a U.S. exporter who is in turn
extending credit to its foreign buyer-again, is for ten year, uh, is for $10,000,000 or
less, and has a repayment term of five years. Okay. Ex-Im Bank would issue an insurance
policy to the insured--again, it can be a bank or an exporter--and that insurance policy
would cover the repayment of the extension of credit to the foreign borrower. We have
multiple insurance policies here at Ex-Im Bank. Some insurance policies will cover a
single shipment to a foreign buyer, some insurance policies will re--will, will support multiple
shipments to a foreign buyer, and some insurance policies will support multiple shipments to
a foreign buyer from multiple U.S. exporters here in the United States. Under medium term,
we require what's called disbursement documents. These are the documents that, as an exporter,
you may present to a financial institution here in the United States that may be benefiting
from Ex-Im Bank's coverage, which in turn is providing the loan to your borrower or
to your buyer of goods. The disbursement documentations generally are a promissory note--which is
generally issued by Ex-Im Bank to the--to another--to the financial institution or to
the U.S. exporter that's extending the credit to the foreign borrower--we would require
a copy of the invoice and the export bill of lading, and a document which is called
the export certificate. Now, you will note that many of these documents are generally
used in everyday commercial practices. This is by design, as Ex-Im Bank likes to use its
medium-term tr--uh, financing to supplement and complement traditional and standard commercial
practices currently in use. The export certificate is a document that is unique to Ex-Im Bank.
It is completed by the U.S. exporter, and, amo--among other things, it verifies the amounts
of U.S. content that is in the goods being supported as well as it verifies whether or
not the U.S. exporter has made arrangements to receive a cash payment from the foreign
borrower. All Ex-Im Bank transactions must have a completed export certificate. Without
a completed export certificate Ex-Im Bank is unable to finance the transaction. Medium-term
loan guarantees. A loan guarantee is made to a guaranteed lender. A guaranteed lender
is generally a commercial bank and/or financial institution--it could be here in the United
States and/or one located overseas--that is extending a loan, a line of credit, to a foreign
borrower. Ex-Im Bank guarantees the repayment of that extension of credit. Okay? Again,
for medium term, we will finance up to $10,000,000 and generally we have repayment terms of seven
years, five being very typical but again, exception of seven years or less. The features
of the medium-term guarantee are very similar to those features we talked about earlier
which cover our medium-term insurance. We will cover 100% of the principal and interest
for 85% of the U.S. contract price. The interest rate is set by the lender, it is not set by
Ex-Im Bank under a medium-term guarantee. So, therefore, it is typically a commercial
rate negotiated between the lender and the borrower. Medium guarantees issued by Ex-Im
Bank are fully transferrable; that is, banks can sell Ex-Im Bank backed transactions amongst
themselves. We will finance in certain foreign currencies and during the life of the loan,
the borrower does have the option to switch the interest rate from a floating rate to
a fixed rate. The primary documentation for a medium guarantee is very similar to that
documentation which is required for medium-term insurance. You will note at the bottom of
the slide we do include the bill of lading--which we've already discussed--the export certificate,
we also have a promissory note which is issued by the lender to the borrower. Additional
documentation for medium guarantees include what is called an Annex A, which is a document
that is issued between Ex- Im Bank and the guaranteed lender, as well as a master guarantee
agreement, again, another document issued between Ex-Im Bank and the lender. As an exporter
you would not be a party to the master guarantee agreement and/or the Annex A. These are not
documents you would need to concern yourself with. It is only if you are a financial institution
and you intend to lend under Ex-Im Bank's coverage would you need to execute these documents
with Ex-Im Bank. We spoke about this very briefly very early on in the presentation
and that is, local cost. And, again, local cost is the cost incurred to an exporter overseas
that is related to the goods or the project that they have been contracted to either build
or provide for a for--foreign borrower. For medium-term transactions, Ex-Im Bank requires
that the local cost be part of the sales contract; that is, the document you execute with your
buyer must clearly codify the responsibilities of the U.S. exporter as it relates to local
cost. If it is codified within your contract, and assuming that the buyer cannot find additional
financing to support such local cost, Ex-Im Bank will finance local costs, will add--excuse
me--will add fo--local costs as part of its overall financing commitment for the transaction.
We are now going to talk very briefly about Ex-Im Bank's long-term financing programs.
Ex-Im Bank has two financial products to support long-term lending; that would be loans and
guarantees--or excuse me--loan guarantees and direct loans. For long-term transactions
the maximum repayment term are determined by where the borrower is domiciled. Category
1 countries are those countries which are typically defined as G7 and/or highly developed
countries, such as Germany, France, the United Kingdom, Japan, and so on. In those markets,
depending upon what your contract amount is, Ex-Im Bank can finance transactions up to
five years. This means, irrespective of the size of the transaction, typically the longest
repayment term we would be able to support in a Category 1 country is five years. However,
for a majority of the countries Ex-Im Bank participates and does financing in, we can
consider transaction--or excuse me--we can consider tenures of much longer term. For
instance, if you had a transaction in the country of Nigeria and the contract amount
was approximately $25,000,000, Ex-Im Bank could set a repayment term of ten years or
more. Direct loan. Unlike guarantees and insurance, which involve either a bank or an exporter
extending credit to its borrower with Ex-Im Bank's assistance, for direct loans Ex-Im
Bank is actually lending the money itself. We are not actually utilizing a bank to serve
as a source of funds. Ex-Im Bank and/or the United States government is the source of
funds. Direct loans are structured very similar to our medium-term and long-term guarantees
in that Ex-Im Bank will support 85% of the U.S. contract price, they are typically done
at a fixed interest rate, we always will use a letter of credit as a disbursement method
to reimburse the exporter, and we have what's called a shipping rule. It is best to utilize
a direct loan when your buyer insists on fixed rate financing and/or you as a U.S. exporter
are competing against a foreign competitor that has brought what is called tied aid financing,
or concessionary financing. Concessionary financing is defined as financing that provides
terms and rates that are well below what the market can offer. In such a circumstance,
it is impossible for a commercial bank--which has to actually go the m--capital markets
itself to fi--to acquire funding--to actually compete and provide a competitive rate. Therefore,
in such instances where tied aid competition is proven, the United States government will
step in and provide a very low interest rate loan to your borrower to support their acquisition
of U.S. exporters. The local costs under long term, again, the coverage is the same--it
is 30%--and, generally, because most long-term financing supports projects such as the construction
of a d--hydro-electric dam or a power plant, local cost is automatically included if the
exporter requests it. Therefore, we do not require for the local cost to be part of the
export contract although sometimes and very often it is for long-term financing. Who can
apply at Ex-Im Bank? Who can be the applicant at Ex-Im Bank is determined by pr--by the
type financial product you are actually applying for. For medium-term insurance a U.S. exporter
can apply, or a lender can apply on behalf of either its customer, the exporter, and/or
its customer could be the foreign borrower. You can also apply for what's called a letter
of interest. A letter of interest is a non-binding commitment from Ex-Im Bank that indicates
to a foreign buyer Ex-Im Bank's willingness to consider the project assuming it meets
certain criteria. Because this is a non-binding commitment anyone can apply. So even after
we issue a letter of interest it, again, it simply provides an indication of what we're
willing to do. A preliminary commitment--anyone can apply; however, Ex-Im Bank limits when
individuals can apply for a preliminary commitment. A preliminary commitment is an actual application
to the bank for financing, which means that Ex- Im Bank would undertake and perform all
the requisite due diligence to determine whether or not it believes this transaction is credit
worthy. If it is credit worthy, Ex-Im Bank will issue an approval and that approval states
that if the U.S. exporter wins the export order, then Ex-Im Bank's financing is assured
for its foreign borrower. But, again, there are limited circumstances that Ex-Im Bank
will do a preliminary commitment because it does involve a substantial amount of resources
and, therefore, we do ask that, typically, if you are applying for Ex-Im Bank financing,
we do ask that you've already have won the export order. If you have won the export order,
if you've executed a sales contract or a pro forma invoice, or received a purchase order,
then you can apply for what's called a final commitment application for either a, a guarantee
and/or a direct loan. Because of the fact that guarantees are only available to lenders,
or to financial institutions, we generally say that only a mandated lender or a guaranteed
lender can apply for a final commitment. In some rare instances foreign borrowers will
directly apply to Ex-Im Bank for a final commitment application, but as I mentioned, because of
the fact that Ex-Im Bank typically does most of its lending through guar-through other
institutions--through banks--we do generally request that they approach a lender, work
with the lender to package its application, and then submit it to Ex-Im Bank. Ex-Im Bank
has a number of initiatives that ha-it has established over the years to support various
sectors and various industries throughout the United States and abroad. First and foremost
is what is called sub-sovereign risk. Years ago, when Ex-Im Bank did financing and government-to-government
lending, typically, that lending would be from the United States government to a central
bank or to a minister of finance. However, over the years, we have found that oftentimes
the central b--the central authorities in various countries that we do business in do
not necessarily have the budgetary resources and/or believe the priorities of certain projects
are at the top of their list to actually a--apply their funding. So what we have done is we
have looked at going below what we call sovereign risk and looking at sub-sovereign risk. An
example of sub-sovereign risk would be such as the, the City or Municipality of St. Petersburg,
Russia approaching Ex-Im Bank and requesting a loan to support its acquisition of U.S.
exports. Before, we would require the City of St. Petersburg to go to the Central Bank
of Russia and get the Central Bank to provide it support. However, because of the fact that
St. Petersburg--using this as an example--has gone to the international capital markets,
it does have a bond rating, it has borrowed money without the support of the Central Bank,
Ex-Im Bank can look directly at that municipality to consider, consider it for an extension
of credit. An additional industry where Ex-Im Bank looks to provide alternative means of
support is the medical industry. There are several medical institutions throughout the
world, that were formerly owned and operated by the government but have been privatized
over the last decade or two, that need to update, uh, their equipment and they do have
a preference to purchase American. However, because of the fact that they were formerly
owned by the government, because of the fact that they initially were probably a part of
the Ministry of Health, they do not have financial statements. They, they do not have any type
of credit documentation that demonstrates history. Therefore, Ex-Im Bank has approached
this tra--these transactions with what we call alternative credit standards. Typically,
when you apply to Ex-Im Bank and you are a private sector borrower, we would require
three years' worth of audited financial statements. However, if you are a medical institution
and you--you've recently been privatized, we waive the requirement for three years.
Perhaps you only have two years, perhaps you only have one year. We will look at those
financial statements and we will also look at what we call forecasting and/or financial
assumptions, looking at future revenue flows based on whether or not the equipment is put
on line and would it generate additional cash flow. So, for Ex-Im Bank, in these types of
transactions, it's a unique way to combine both traditional tr--trade finance with what
we would call project financing to determine whether or not these obligors are credit worthy.
In addition, we will do equipment financing through what we called asset-bashed--asset-backed
transactions. Once again, we would do this by, by not relying solely on the historic
balance sheet of a borrower. We look at future, future ca--uh, cash flows and things of that
nature, we look at perhaps taking liens or other types of security to get comfortable
with the obligor. Co-financing. This is when Ex-Im Bank teams up with another export credit
agency and provides a single credit package to a foreign borrower. Co-financing has been
quite common in Europe, where you would have European companies competing for transactions
and when they win those transactions, they're sourcing from all over the continent, from
all over the continent. So what they'll do is they'll approach their indigenous export
credit agency and ask for a single-financing package, but what is happening in turn is
that export credit agency is going to all the other export credit agencies and effectively
being reinsured on the portion of goods that are coming from those countries. What this
effectively does is it streamlines the documentation. Prior to having co-financing, if you are a
U.S. exporter and you had a project in a country and you were sourcing from two different countries,
your borrower may have had to fill out two different sets of credit documentation. Now
that we have co-financing that is no longer a requirement. The borrower only has to fill
out one set of credit documentation, which ultimately cuts down on the amount of fees
that are expent, obviously to document the transaction. Lastly, Ex-Im Bank has an environmental
exports transaction. Ex-Im Bank recognizes that U.S. exporters are the lead in environmental
technology, and we also recognize that many of these transactions occur in countries where
it sometimes is very difficult to obtain financing. Therefore, we have created various initiatives
and various incentives to bring foreign borrowers, or to incentivize foreign buyers, to use Ex-Im
Bank and purchase from U.S. exporters. That concludes the brief summary of Ex-Im Bank's
medium and long-term financing program. I appreciate your appreciation and we will now
take questions. Thank you. I have received some questions. The first question is, can
ferrous or non-ferrous scrap metal be financed as well. The answer to that question is yes,
depending upon the nat--the type of metals that are actually being financed. We can finance
scrap metal; however, it is important to note that since scrap metal is typically an input
stock and oftentimes identified as a raw material, we do not finance scrap metal fo--at medium
or long term. We will finance scrap metal for what we call short term and that is, repayment
terms of 360 days or less. Does Ex-Im Bank do financing leasing is the next question.
The answer to that question is yes, Ex-Im Bank does do financing leasing. Typically
the leasing structures are similar to our standard medium-term financing structures.
Since financing leasing oftentimes is simply a moth-another means to procure goods and
services. Question: How does one confirm that one's technology is proven? There are several
ways to do that. It is true that Ex-Im Bank typically does not finance quote, unquote
"new or unproven technology." So the question is, what type of technology are we talking
about and whether or not that technology is regulated or requires any types of certifications
from the United States government or any other type of regulatory authority. If it does,
oftentimes those certifications can go and provide some degree of, of validity or, or,
or veri--verification that the technology is proven. We do prefer for the technology
to, to have previously been deployed so there is a track record of its performance. If it
has not previously been deployed, and if there are no certifications, then we clearly would
have to do additional due diligence to determine whether or not that technology is viable enough
to receive support from Ex-Im Bank. Next question: How long does it take for medium-term insurance,
cost, fees to exporter? Ex-Im Bank currently processes or average--or on average processes
medium-term insurance applications in a period of approximately 30--30 business days. That
can go up and down depending upon the nature of the transaction and, obviously, its complexity.
It's important to note that Ex-Im Bank's ability to respond quickly or promptly to a medium-term
request is directly linked to how complete the application is. If there is a necessity
to require or request additional information, that could prolong the processing time. The
cost of the insurance is determined by the level of the risk associated with the transaction.
For instance, if your buyer is located in what we would determine a high risk market
and/or your buyer has, uh, financial ratios that deem it to be a high risk, the cost could
be somewhat significant or somewhat higher than typically you would, you would find in
the capital markets. Uh, an example would be a medium-term insurance to certain markets,
uh, for five years might cost you on average, or having a premium fee of approximately anywhere
from 5.6 upwards to 7.6%. Okay? Are there any fees to the exporter if you apply for
medium-term insurance? The answer to that question is no. The application fee to apply
for medium-term insurance is free so, therefore, there is no inherent cost directly to the
exporter. Um, however, in an--any circumstance it is, it is not uncommon, although it is
not necessarily frequent, where the buyer may ask the exporter to t-assume some of the
premium cost and/or to lower the cost of its overall product to make up for the cost of
having to secure insurance. This doesn't happen all the time, but it does happen, and if--this--if
you are a U.S. exporter looking to utilize Ex-Im Bank's medium-term insurance, I encourage
you one, to identify your borrower--to approach Ex-Im Bank to get a more accurate assessment
of what the costing can be so you can provide your foreign buyer a more accurate assessment,
or a notional assessment, of what it may cost to use Ex-Im Bank's insurance. Next question:
What countries are we lending to? Ex-Im Bank does lending in over 130 countries throughout
the world. Uh, we, we lend, um, to a majority of the markets where w-- Ex-Im Bank would
consider itself open. What I would encourage you to do is go to our web site, which is
www.exim.gov, and look up a document called the Country Limitation Schedule, oftentimes
abbreviated CLS. The CLS will identify all the markets where Ex-Im Bank is open to do
business, as well as identifying the term Ex-Im Bank is willing to support. In some
markets, because they have macroeconomic situations or macro-political situations, we may not
be able to do financing in excess of one year or in excess of seven years so, therefore,
there may be some limitations on those markets because of what we would consider to be high
risk factors that cannot be appropriately mitigated. So please visit our web site to-rev--and
review the CLS to determine those markets where we're open to do business. If we are
open to do business, then Ex-Im Bank will consider a transaction in that market. Question:
Does Ex-Im Bank play a role in franchise setup? Yes, we do. Ex-Im Bank has financed several
franchises overseas. We have financed both franchising licenses, as well as the procurement
of the various hardware that many franchises require their franchisees to purchase, to,
obviously, sell their product. Uh, so, yes, we do. Question: Difference between medium-term
insurance or medium-term guarantees. This is a very good question and the slide show
did not delineate this information cl--enough. Medium-term insurance is what is called a
conditional product. The conditionality means that even after you file a claim, if you did
not adhere to the medium-term insurance documentation in the policy and guidelines, Ex-Im Bank can
deny your claim. Medium-term guarantees is an unconditional commitment. We say no matter
what, Ex-Im Bank will pay the obligation--should a claim be filed--if you secured a medium-term
guarantee. There is a pricing differential between medium- term insurance and medium-term
guarantees. The pricing differential varies by transaction and by market; however, it
can be anywhere from 15 basis points upwards to 100 basis points to-again, depending upon
the nature of the transaction. Question: Does Ex-Im Bank require documents in English? Typically,
yes, Ex-Im Bank does require for the documents and the application to be filed in English.
However, depending upon the na--the, the amount of the credit and, in some circumstances,
Ex-Im Bank will accept documentation in Spanish. Generally, this is for transactions that are
$1,000,000 or less. Um, if it's in, if it's in excess of $1,000,000, it must be in English
and/or it must have certified translations, if it less than $1,000,000 we can accept it
in Spanish. If it less than $500,000, and depending upon the nature, we've also accepted
documents in Portuguese. Question: Does Ex-Im Bank have experience with EU reconstruction
funds, beneficiaries to ensure payment on such projects? Ex-Im Bank has participated
in a number of projects that does include other export credit agencies or, in many circumstances,
other multi-lateral or multi- development banks such as the IMF, the World Bank, African
Development Bank, and such, such forth. So, yes, we do have experience in dealing with
various banks. I can't speak specifically of whether or not we've done with EU reconstruction
funds; however, I can say that to the extent that they are--if they are involved in the
regions where Ex-Im Bank is involved, there's a high probability that we have dealt with
them at some time. I encourage you, should you want additional information on this, to
contact Ex-Im Bank or perhaps a regional office which supports your region-area, and find--provide
them specifics of the transaction you are inquiring about, and we can look and determine
whether or not we've actually worked with the EU reconstruction fund. Is there a long-term
program for the purchase of inventory longer than 12 months? Typically, inventory can only
be supported for a period of, generally, 12 months or less. This is because the inventory
oftentimes is going to be utilized as input stock for the construction of items. However,
if your inventory is capital goods-such as if you were a dealer of tractors or cars or
other items that may not necessarily be procured within a 12-month cycle--depending upon the
economy, yes, we can support inventory for a period in excess of 12 months. It is not
uncommon for Ex-Im Bank to support foreign dealers of U.S. manufacturers of both tractors
and cars with an--with a medium-term insurance or guarantee product for two to three years,
meaning that once they buy your stock--your rolling stock--they have two to three years
to repay back the Ex-Im Bank loan. Typically, once the foreign borrower sells the asset,
we do ask th--for them to repay that portion of the loan related to that particular asset.
Question: Are Ex-Im Bank's products limited to banks and financial institutions? The answer
is no. A-As I mentioned earlier, for medium-term insurance U.S. companies or exporters can
come in and apply for a medium-term insurance policy. However, outside of that, if you're
applying for a guarantee, or if you're applying for a direct lo--a direct loan, generally
the applicant must either be a bank, a financial institution, and/or the borrower of the funds.
If you do not fit in either of those categories, I encourage you to contact Ex-Im Bank directly
and speak to an Ex-Im Bank regional officer to determine whether or not your company can
benefit as a beneficiary for Ex-Im Bank's financing as an applicant. Question: Any experience
lending to Sierra Leone? Yes. Ex-Im Bank does have some limited experience lending to Sierra
Leone. We have not leant to the market in some time due to macroeconomic conditions,
but we have a vast wealth of experience lending to Sub-Saharan Africa. In fact, Ex-Im Bank
had a Sub-Saharan Africa initiative which tap--which specifically tasks a significant
amount of Ex-Im Bank resources to both develop and underwrite business within the Sub-Saharan
African region. Question: Are you required to be a manufacturer? No. You are not required
to be a manufacturer to benefit from Ex-Im Bank's financing. Ex-Im Bank supports a number
of distributors or dealers in the United States that do not manufacture anything. We also
support a number of trading companies that again do not manufacture anything. They acquire
their goods either directly from the manufacturer or they may buy it on the open market. Regardless,
if they are exporting those goods overseas, ExIm Bank can support their foreign buyer's
acquisition of their goods. Question: Is Ex-Im Bank still doing business with Egypt? Answer
is yes, Ex-Im Bank is still open within Egypt. Therefore, at this time, if you have a transaction
in Egypt we can consider it. However, given the fact that the situation in Egypt is somewhat
fluid, it is possible that Ex- Im Bank could see a material change to the market which
could impact our cover policy and may limit our ability to support ongoing transactions
in that market. However, currently we are open in Egypt and I, I, I am not aware of
any information at present that would close us in the market. Question: What is Ex-Im
Bank's track record with Columbia? Ex-Im Bank, overall, has a default ratio of approximately
3%. That is much lower than you would find in the commercial sector. That is because
we have a significant amount of experience with underwriting transactions internationally.
As far as our track record with a specific market, I cannot speak to that right now because
I do not have the information in front of me; however, I can say that gener--in general,
given our, given our overall track record, I would say our track record probably is fairly
good. Uh, Columbia is a market we, we, we--where we have a substantial amount of business in.
Um, like all markets, it is cyclical. There are some times when we've had a substantial,
or should I say, we've had a very good track record in that market, and there are some
times when the market has gone through economic decline which has led to unfortunately, uh,
we--you know, a, a, a, a uptake in claims activity. For instance, in the 1980s Ex-Im
Bank had significant experience in Mexico. Unfortunately, in the 1980s there also was
a Mexican debt crisis which led, ultimately, to a number of Mexican companies--that had
taken out loans backed by Ex-Im Bank--being unable to honor their obligations. This was
simply a, a fact of the macroeconomic environment and it was not an issue of the, of the company's
unwilling-or un--or unwanting to, to--excuse me-unwilling to make those commitments or
meet those commitments. In that instance, Ex-Im Bank restructured many of those loans
and, ultimately, the loans were paid off in full. I would say the same has happened in
Columbia, and it did happen in the 1990s and we did see an uptake in claim activity; however,
overall our experience in the market has been satisfactory. To the extent that Ex-Im Bank
finds itself in a market where we do not believe there is a strong, strong possibility of repayment,
that would be reflected on our country limitation schedule. Our country limitation schedule
would clearly articulate the fact that Ex-Im Bank's cover policy is restricted in that
market, and those restrictions could be due to the fact that, historically, the losses
had been so great that we simply do not see that as a viable market. That is not the case
with Columbia, as we are open. Recurrent--do we--Question: Do you currently ha--do you
currently have transactions in the Philippines? I am not aware, currently, of any transactions
that Ex-Im Bank is processing in the Philippines; however, I--it is important to note that I
do not necessarily cover all of Ex-Im Bank's transactions. Therefore, it is very possible
that we do have transactions in the Philippines. The Philippines, historically, is a market
where Ex-Im Bank has done a substantial amount of business. Therefore, it is, it is very
probable--highly probable--that we do have a transaction somewhere in Ex-Im Bank that
is being processed for Filipino borrower. We are open in the Philippines so, therefore,
if your- if you have a transaction in the Philippines you would like Ex-Im Bank to consider,
I would en--I would encourage you to approach the bank. Question: Can U.S. shipping costs
be included in financing? Yes. Ex-Im Bank will support the U.S. shipping costs related
to the export of a U.S. manufactured item. This is quite common, in fact, that Ex-Im
Bank covers all U.S. sourcing into a particular project. Generally, i--for the financing itself,
we can support any and everything that is being sourced from the United States. Okay?
Again, if it is being sourced outside the United States, and, and if it is not brought
into the United States, then we would consider that foreign content, and we wo--and it may
be considered ineligible foreign content, which means that either the borrower would
have to support them out of their own pocket, or Ex-Im Bank would participate in a cofinancing
structure to finance that for your borrower as well. But, yes, U.S. shipping costs can
be included in Ex-Im Bank's financing. Question: Does Ex-Im Bank deal with Venezuelan buyers?
Currently, Ex-Im Bank is closed in Venezuela so we would not be able to consider any transactions
where the buyer is domiciled in Venezuela. Question: Can medium-term agreements be converted
to long-term and, if so, under what conditions? Generally, if the Ex-Im Bank is financing
a product under a medium-term transaction or a medium-term documentation, we do not
convert that into a long-term document. All right? However, there have been circumstances
in the past where a buyer has, has had one of its medium-term obligation to be absorbed
into a long-term obligation. Can that be done, and the answer to your question is yes. The
determination is made on a case-by-case basis, it is generally very specific and very rare,
but we can look at it. Question: Does Ex-Im Bank deal with Iraq? Yes, Ex-Im Bank is currently
open in Iraq in the--both what we call the public sector and the private sector. We are
currently open to support transactions with the total repayment term of up to seven years.
We'll be able to take a few more questions and then, unfortunately, we are going to have
to log off. Question: Can foreign duties be included in the loan? Generally, Ex-Im Bank
does not pay foreign custom duties or do not, not allow for corn--foreign, uh, custom duties
to be financed. However, in some circumstances, Ex-Im Bank has allowed for value-added taxes--which
are the responsibility of the exporter sometimes--to be included in the overall financing. So,
therefore, yes, value-added taxes, which can be identified sometimes as foreign duties,
may be included in the Ex-Im Bank financing. Question: Can you please speak to financing
renewable energy in Africa? Ex-Im Bank has recently created a s--s--a renewable energy
group simply tasked with supporting environmental technology throughout the world. Obviously,
with that said, we can support such transactions in Africa. We have looked at doing some renewable
energy transactions, such as solar and geothermal; however, to be honest, we have not done a
number of transactions in this market. This is not to say we are not interested, so what
I will say to this question is that if you have a particular transaction, I highly encourage
you again to contact Ex-Im Bank so we can discuss this one-on-one, talk about your transaction,
and determine the appropriate structure and the appropriate financing product to suit
both your needs and your buyer's needs. Question: Does Ex-Im Bank do business in Ghana currently?
Answer: Yes. Ex-Im Bank is open in Ghana and we've done a number of transactions in both--in,
in the bo--Ghanaian public and private sector. Ghana is one of our most robust markets in
Sub-Saharan Africa and, therefore, uh, we do encourage you--if you have a Ghanaian transaction--to
approach us. In the end, I do want to sum up one thing. As I mentioned earlier, Ex-Im
Bank does have certain policies that govern our transactions and one of them is the shipping
requirement. And there have been some questions on that. The shipping requirement--which I
noticed the slide show did not cover--but the shipping requirement does state--is, is
the following. Mm, mm, please write this down because this is very important if you're looking
to finance a long-term transaction with Ex-Im Bank. For all transactions that are medium-term--or,
excuse me, that are long-term guarantees in excess of $20,000,000 or all direct loans,
Ex-Im Bank requires that you ship on a U.S.-flagged, registered vessel. If you do not ship on a
U.S. flag registered vessel, and even though you may have received support from Ex-Im Bank,
Ex-Im Bank's financing would be voided. Therefore, it is very important that when you are making
logistical arrangements, that you secure shipping on a U.S. flag, flagged vessel. If a U.S.
flag vessel is not available, for whatever reason, you will need to seek a waiver. Waivers
are pro--provided by the Maritime Administration which is part of the Department of Transportation.
Ex-Im Bank has nothing to do with actually receiving the waiver, but the waiver is important
and is critical for you to be able to benefit from Ex-Im Bank financing. With that, ladies
and gentlemen, I thank you very much for your time and participating with Ex-Im Bank's Webinar.
Should you have any questions I do encourage to call the 1-800 number and/or get onto our
web site. Please remember that Ex-Im Bank has regional offices located throughout the
United States. Should you have any questions that were not sufficiently addressed in this
presentation and/or should you have transactions that you would like to discuss with Ex-Im
Bank in greater detail, I do encourage you to contact our regional office. Thank you.
MR. GRACE: I want to add my thanks to both you, Kyle, and to those of you that have participated
in today's webinar. This webinar will be placed on our web site, www.exim.gov. Just give us
a few days to transcribe it and get it posted. Um, you will receive from us a little thank
you note and a short questionnaire. We would appreciate it if you could quickly respond
to the seven questions that we have included there. Also, we are conducting global access
events throughout the United States to introduce Ex-Im Bank to small business. Our next global
access event will be in Lafayette, Louisiana on the 28th of February. We also will be having
our annual conference on March 31st and April 1st . Again, thank you for your participation
and including us in your activities today. This will conclude the webinar. Thank you.