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Presentacion Dario Avello US ExIm Bank
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Presentacion Dario Avello US ExIm Bank

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  • 1. Finance Lease Guarantee Dario J. Avello Business Development Officer Export-Import Bank of the U.S. [email_address]
  • 2. Export-Import Bank of the United States?
    • Ex-Im Bank:
    • An independent agency of the U.S. Government
          • Established in 1934
          • Headquartered in Washington, D.C.
          • 5 regional offices and 2 satellite offices
    • Mission:
    • To Support U.S. Exports
    • To Create and/or Sustain U.S. Jobs
  • 3. Ex-Im Bank’s Main Credit Products:
    • S/T export credit insurance
    • S/T pre-export guarantees (Working Capital)
    • M/T guarantees/insurance (<$10m, & <7yrs)
    • L/T loans and guarantees (>$10m, or >7yrs)
    • Project finance/structured finance
    • Foreign Dealer Finance Insurance (Floor Plans)
    • Finance Lease Guarantee
    • Finance Lease Insurance
    • Operating Lease Insurance
  • 4. Total Authorizations in $Billions
  • 5. Just a few restrictions:
    • Military Exports (exceptions apply)
    • Foreign Content
    • Restricted Countries (political or economic)
    • Economic Impact
    • Shipping
    • Creditworthiness and Additionality
    • Environmental
  • 6. Military Restrictions:
    • No Defense Articles or Services:
    • Three Exceptions:
      • Humanitarian purposes
      • Drug interdiction
      • Dual use items
  • 7. Finance Lease Guarantee Parameters:
    • Guarantee available only on finance lease
    • Up to $10 million amount
    • 100% political and commercial risk cover
    • Lessor must be financial institution, affiliate, or an experienced leasing company
    • Acceptable structures:
    • US Lessor  foreign lessee = cross border lease
    • Foreign Lessor  for. lessee = local lease
    • Foreign Lessor  3 rd country lessee = international lease
  • 8. Finance Lease Guarantee Parameters (Cont’d.):
    • Net leases (maintenance costs for lessee)
    • 15% cash D.P. required (Lessor may finance it for lessee)
    • Exporter Certificate req. by Lessor (x-border lease) or by Supplier (local and international leases)
    • Level amortizations (equal principal) – OK
    • Level Rents (equal payments) – OK
  • 9. Finance Lease Guarantee Parameters (Cont’d.):
    • Title to leased asset remains w/Lessor
    • Residual values are allowed
    • At each Rental Pmt Date there is a Termination Value (used for claims)
    • Local costs and ancillary services are OK, subject to prior approval
    • Lessor’s Lease Agreement needs prior approval and 3 rd party legal opinion
  • 10. Apply for Guarantee: Step One
    • Do the following:
    • 1.- Ask Ex-Im for a MGA-FL by completing: Application for a Master Guarantee Agreement–Finance Lease (Medium-Term Credits–Electronic Compliance Program) aka Appendix 10-f
    • 2.- Submit your data
    • Find the application for the MGA at:
    • www.exim.gov/pub/pdf/ebd-l-02.pdf
  • 11. Apply for Guarantee: Step Two
    • Then…
    • READ the MGA–FL, which is the legal framework of our relationship with the Lessor (or do this as Step One!)
    • The text of the guarantee can be found at the following link:
    • www.exim.gov/pub/pdf/mga-mfl.pdf
  • 12. Lessee Credit Qualification:
    • See M/T Credit Standards:
    •  www.exim.gov/pub/pdf/ebd-m-39.pdf
    • Missed credit standards may have mitigating circumstances, or lessor may have outside guarantees or collateral; so, applicant for guarantee must MAKE THE CASE in the application
    • Lessor title to asset is not a singular mitigation for low credit quality of Lessee
  • 13. Lessee Credit Application
    • Originate :
    • A term sheet for a credit-worthy Lessee, then apply to Ex-Im using Application for Medium-Term Insurance or Guarantee, and check the box for the Finance Lease Guarantee
    • Find the application for the Lessee Credit at:
      • www.exim.gov/pub/pdf/eib-03-02.pdf
      • Follow the instructions of and submit the Exhibits, Schedules, and Annexes of the application.
  • 14.
    • Pre-contract Letters of Interest from Ex-Im: Cost $100 @ – available online – are non-binding but outline the full structure and are useful in marketing to the prospective Lessee
    • Guarantee commitment fee: 1/8% p.a., begins to accrue 60 days from Guarantee Approval Date (aka Credit Approval Date), is calculated to Lease Delivery Date, and it is payable 45 days after accrual has begun, whether or not Credit/Guarantee has become operable
    What does it cost before the deal?
  • 15. What does it cost upon success?
    • Exposure Fee: determined by the country of risk, type of Lessee (sovereign, private-sector, or bank-guaranteed), term of lease, delivery period, buyer risk, and fee financing.
    • Examples, private Lessee (typical risk):
    • Mexico/Chile 5 years 1.77% flat
    • Costa Rica 5 years 2.89% flat
    • Brazil 5 years 4.32% flat
    • Peru 5 years 4.73% flat
    • Dom Rep 5 years 6.15% flat
  • 16. How to Claim on the Guarantee
    • Lessee is past due if he has not paid after 30 days from a scheduled installment of Guaranteed Rents (rents may be payable monthly, quarterly or semi-annually)
    • Lessor makes formal demand of payment on lessee at that time
    • 15 days later, Lessor may claim/demand payment from Ex-Im Bank
    • Lessor will utilize Schedule D to assign all rights, title, and interest in the Lease Supplement (the remaining rents due on the Lease, and the amount claimed) to Ex-Im Bank
  • 17. Finance Lease guarantee added features:
    • Ex-Im Bank’s Loan and Lease guarantees are available to cover obligations denominated in 22 foreign currencies. Foreign Currency Guarantees have stipulated conversion dates, e.g., when a claim is paid in a foreign currency, the remaining obligation of the Lessee is converted to US$
    • See Foreign Currency Supplements:
    • www.exim.gov/pub/pdf/suppl-fcs/pdf , and
    • www.exim.gov/pub/pdf/annex-fcs.pdf
  • 18. For further Assistance and Information:
    • Please contact:
    • Darío J. Avello Business Development Officer
    • Southeast Regional Office 5835 Blue Lagoon Drive, Ste 203 Miami, Florida 33126 USA
    • (305) 526-7436 Ext. 19
    • [email_address]
    • www.exim.gov