Jobs Through Exports EXPORT-IMPORT BANK Presentation Transcript
Financing Environmental Exports “ Opening Opportunities in Mexico” AWWA 2006 Conference & Exposition June 11, 2006 Ashok Pasricha Export-Import Bank of USA Engineering & Environment Division
Introduction to Ex-Im Bank
Ex-Im Bank’s Environmental Exports Program
Ex-Im Bank Introduction
Independent agency of the U.S. government.
Established in 1934 to finance the export sales of goods and services produced in the U.S.
Since 1934 - supported over $450 billion in exports.
Supports short, medium, and long-term financing to credit worthy international customers both public- and private-sector; working capital guarantees to U.S. exporters.
Products include Direct Loans, Guarantees, Export Credit Insurance, Working Capital Guarantees, Tied Aid Fund
No minimum nor maximum project size.
Special initiatives for environmental exports, small business, and lending directly to municipalities.
US Environmental Industry Trade Balance 2003 (in $billions) Source: Environmental Business International, Inc.
Environmental Exports Program
Support for environmentally-beneficial exports included in our Charter.
Environmental Exports Program Consists of pro-active business development and enhancements to existing Ex-Im Bank programs.
Director Conlin formed new Environmental Exports Team
Environmental projects are offered enhancements:
Maximum OECD repayment term for Long-Term Loans and Guarantees of 10-15 years after project completion.
Capitalization of interest during construction.
Up to 15% local cost support within the U.S. scope of supply.
Repayment terms of 15-years allowed OECD as of July 1, 2005!
Use of structured finance approach to support smaller projects
RESULTS: Transactions approved under the Program grew from
13 in FY 1994, to 78 FY 2005, totaling over $2 billion.
Special Terms approved by the OECD for 2-year trial period include:
WATER SUPPLY & TREATMENT:
Projects related to the supply of water for human use and wastewater treatment facilities; collection and treatment of household and industrial wastewater and sewage, including water recycling and treatment of sludge
Solar photovoltaic power
Solar thermal energy
Tidal and tidal steam power; wave power; ocean thermal energy
The Ex-Im Bank recognizes need for clean water & sanitation in emerging markets – where commercial lenders will not assume risk
Environmental Exports Program offers enhancements for certain water quality exports
The Ex-Im Bank has a strong record on financing exports for potable water supply and wastewater treatment plants
Sin ce 2002, assisted in over $350 million of U.S. exports for water projects
Ex-Im Bank Financing Products
A wide variety of products to meet a diverse range of environmental deals
pre-export finance – working capital guarantee program
short term financing – insurance
medium term financing – insurance & loan guarantees
long term financing – loan guarantees
Short-Term (Payments up to 180 days, exceptionally 360 days)
Small Business Multi-Buyer Policies:
Letter of Credit
Financial Institution Buyer Credit
Financial Institution Supplier Credit
Medium-Term (1-5 year payments, exceptionally 7 years)
Export Credit Insurance
Enables U.S. exporters to offer short- and medium-term credit directly to their customers.
Export credit is an attractive substitute to cash-in-advance, letters of credit and costly local bank financing.
Using Ex-Im Bank to insure a letter of credit instead of paying bank confirmation charges usually more cost effective.
Example: Insurance costs 0.11% or $110 for a $100,000 sight letter of credit vs. $2,500 minimum bank confirmation charge.
Supports repayment terms up to 180 days beginning from date of importation of the goods; capital goods terms of 360 days-7 years.
Loan Guarantee Program
Guaranteed Loans made by commercial banks (U.S. or foreign) to a foreign buyer with a 100% unconditional repayment guarantee from Ex-Im Bank
Guarantee covers 85% of the U.S. content of the transaction.
Negotiated interest rates, usually a floating rate based on spread over 6-month U.S. dollar LIBOR rate
Loan fully transferable, can be securitized
Banks often finance the 15% required cash payment
Guarantee available in Euros, other currencies
Case Study: Facileasing, S.A.
PNC Bank, Pittsburgh, PA arranged a 5-year loan for Facileasing, S.A., Mexico City, to purchase $1 million in U.S.-made equipment.
The equipment includes a desalination plant , solar panels , laundry equipment, and golf carts which Facileasing, S.A will lease to the Hotel Marival – Cancun on 5-year lease payment terms.
Facileasing, S.A, based in Mexico City, offers both finance and operating leases with payment terms ranging from 12-60 months.
Facileasing, S.A.’s customers include both Mexican and U.S. and other multinational companies, in the food, pharmaceutical, and printing sectors.
Facileasing, S.A. retains title to the leased assets for the entire term of the lease.
Working Capital Guarantee
Ex-Im Bank provides 90-100% repayment Guarantee for working capital loans, revolving or transaction based, made by commercial lenders to small businesses to finance export sales.
The Working Capital Guarantee serves as the collateral to the commercial lender by mitigating the risk inherent when the source of repayment for the loan is an overseas contract.
Enables exporters to finance materials, labor, and overhead to produce goods/services for export.
Enables exporters to cover standby letters of credit for bid and performance bonds, or payment guarantees.
Enables the exporters to finance foreign sales receivables.
Most Working Capital Guarantees provided by Delegated Authority Lenders without prior Ex-Im Bank approval.
Short-term EEP Case Study: Environmental Dynamics, Inc (EDI)
EDI of Columbia, MI – established in 1975 – had mainly domestic sales and wanted to expand to new foreign markets for its advanced water and wastewater treatment technologies.
In 1997, used Ex-Im Bank’s short-term insurance to offer financing to their international customers with repayment terms ranging from 60-360 days.
Result : Dramatically increased their sales and now has a distribution network in more than 30 countries. EDI has installed equipment in more than 3,000 industrial and municipal wastewater treatment systems worldwide.
EDI plans to hire additional employees and expand marketing further in Asia and Latin America.
Case Study: Aruba Desalination
Ex-Im Bank’s Comprehensive loan guarantee under the Environmental Enhancement Program enabled Aqua-Chem of Milwaukee to win an $9.3MM contract to win and build a 1000 gpm desalination plant for Aruba’s Water and Electricity Board.
Ex-Im Bank supported enhancements to the Loan:
repayment term of 7 years (longer terms were offered)
capitalized interest during construction (1.5 years); total term equal to 8.5 years
supported an additional 15% local cost.
Canadian Imperial Bank of Commerce made the loan to WEB, NV at fixed interest rate with Ex-Im Bank’s Guarantee.
Ex-Im Bank and CIBC’s Program support, and willingness to meet directly with WB,NV , helped Aqua-Chem win this deal over foreign competition.
We have the right product to meet your export needs
Ex-Im can finance any size deal. No minimum or maximum
Focused on increasing environmental exports – using resources throughout the bank
New 15 year terms
Ex-Im Bank supports short, medium, and long-term financing to creditworthy international customers, and working capital guarantees to U.S. exporters.
Ex-Im Bank is focused on increasing its support for environmental exports.
New 15-year repayment terms offer a strong enhancement for water technologies exports .