1. BEST PRACTICE
Export Credit Agencies (ECA) finance the export of goods and services from their home country
to a host country / it is possible also working with multiple ECA (co-financing agreements)
ECA financing terms are more favourable, better than the one offered by commercial banks
becouse of the used interest rate
ECA can use CIRR rate, that is a rate allowed for OECD, supported export credit financing
Relevant rate published the 15 th of every month
Relevant CIRR rate is valid for 5 days before the first disbursement so the date is important
ECA MAIN PRODUCTS
BUYER CREDIT - isurance / guarantee / direct loan
Sovereign / corporate / bank to bank financing
SUPPLIER CREDIT
Short term - insurance of receivables/ working capital loans

2. BUYER CREDIT
BUYER CREDIT is a financing by an Export Credit Agency (direct financing or indirect financing)
to a foreign buyer and it is related to the export of goods and services
Creditworthiness of the borrower is the key;
if the borrower has a good creditworthiness a UNSTRUCTURED FINANCING can be put in place
The main instruments of an ECA
-) insurance - commercial banks lends under an isurance coverage or guarantee
Insurance is tipical less than 100%
-) guarantee  commercial banks lends under a guarantee that is usual 100%
-) direct loan - ECA lends directly funds to the borrower and no commercial bank is involved
ECA environmental review is consistant with Equator Principles: environmental framework to
determine and manage environmental and social risks - adopted by private banks and private
institutions

3. First structure : corporate financing
This structure applies when the Buyer is creditworthy – ECA has a guaranteed agreement with
guarantor
ECA
Insurance / Guarantee
agreement with
LENDER
Loan agreement with
BORROWER
Supply contract with
EXPORTER
GUARANTOR

4. Second structure : sovereign financing
Country is willing to assume debt liability / Ministry of Finance is the Guarantor
ECA
Insurance / Guarantee
agreement with
LENDER
Loan agreement with
BORROWER
Supply contract with
EXPORTER
GUARANTOR

5. BUYER CREDIT – TENOR OF LOANS
The TENOR of loans:
Short Term: up to one year
Medium Term: from one to 7 years
Long term: from 7 to 12 years
There could be a tenor up to 18 years for product such as renewable energy / loan
tenor is tipically related to the asset life (e.g. Commodities are different form long
term equipment)
The limit for high income country is 8.5 years
There can be also a collateral used when export goods are used / required to
serve as a collateral for ECA loan

6. PROJECT AND STRUCTURED FINANCE
Structured finance relies on the use of credit enhancements to mitigate the
financing risk - key of this structure: is risk mitigation after risk
identification
Project finance relies on future project cash flow rather than the sponsors
balance sheets to underwrite financing
Sales contract are generating sufficient cash flow to allow the repayment of
the debt
Project financing can be defined as the financing of a project by a sponsoring
firm where the cash flow of the specific project are marked as the source of
the funds from which the loan will be repaid (so called non – recourse debt*)
and where the assets of the project serve as the collateral of the loan
Asset and cash flow of the SPV are segregated by the one of the sponsors
*non recourse debt - sponsors ans SPV are legally indipendent

7. PROJECT FINANCE PARTIES
1)SPECIAL PURPORE VEHICLE (SPV) i.e. Borrower created in a specific way for
this project
2)SPONSORS  give equity / show debt financing of the project company in
balance sheets if they own majority of shares
3)SUPPLIER
4)EPC CONTRACTOR - (engineering procurement construction)
5)OFFTAKER - the part that is buying the product and services / the price is
generally contracted and fixed in advance
6)GOVERNMENTAL AGENCIES
7)LENDER  banks provide loans to the Borrower
8)ECA  have a lot of indipendent advisors (paid by the sponsors) to perform
due diligence / they usually set the pace of financing
9) OPERATOR

8. PROJECT FINANCE MAIN ASPECTS
COSTS are tipically higher thet the ones for undestructured financing
They are born by the sponsors before financial closing
Even ECA Advisors can be really expensive and they are usually born by
sponsors
SECURITY PACKAGES are needed by an ECA - have real rights over a
Borrower asset / have recourse on sponsors / holds interest in all the project
asset / pledge of shares
Any other debt is subordinated to an ECA loan (pari passu can be acceptable)
Negative pledge/
FINANCIAL COVENANTS
Such as DEBT / EQUITY RATIO (that should be as low as possible) based on
the creditworthiness of the project financing packages/ that are variable and
valuated by the Lender
DEBT / SERVICE COVERAGE RATIO
LOAN LIFE COVERAGE RATIO

9. PROJECT FINANCE MAIN ASPECTS
CONDITION PRECEDENTS
Execution of all operative documents
Indipendent official confirmation by parties
Approval of the loan by sponsors / approval of security package by
appropriate parties
FINANCIAL COVENANTS
Such as DEBT / EQUITY RATIO (that should be as low as possible) based on
the creditworthiness of the project financing packages/ that are variable and
valuated by the Lender
DEBT / SERVICE COVERAGE RATIO
LOAN LIFE COVERAGE RATIO

10. SUPPLIER CREDIT
It is a short term financing given by an Export Credit Agency to an Exporter of Goods and
services to boost its growth and minimize the risk of non payment
There are two main instruments
a) Short term credit insurance (more favorable to exporters)
i.e. Against the possibility of having non payment of account of receivables by foreign
buyers
b) Working capital guarantee (works by using the ECA Policy as a collateral / the lending
given by a commercial bank is expanded / greater liquidity is a consequence)
Receivable of payments is insured by an ECA
In case of multibuyer policies an exported pools of international account of receivables
are insured

11. CONTENT ELIGIBILITY RULES USED BY US-EXIM BANK
• How much content in terms of goods ans services is financeable?
• There are wide differences between ECAs but there are some general
rules
• 15% as down –payment is needed
• 30% of local costs maximum are financed
• US EXIM BANK
• A) US CONTENT are the goods and services shipped and vesseled in a US
flag vessel plus US services
• B) FOREIGN CONTENT are the goods and services non US and non local
but if goods and services are non US but shipped from US with a vessel
with US flag they can be ELIGIBLE content
• C) LOCAL CONTENT are the goods and services producted by local
company
• no more than 30% of contract supply for financing of local content

12. CONTENT ELIGIBILITY RULES USED BY US-EXIM BANK
• Since financeable portion can be the minimum between
• A) 85% of contract price
• B) the minimum of US content in contract price
• US –EXIM bank can finance also 100% of US-EXIM bank exposure fee and
interests duing constructions
• In some case it is possible to increase the content eligibility appointing a
consolidator that is a company that collect all the US procurement
• It will be appointed by all the other companies in writing / approved by
US-EXIM Bank
• Consolidator will provide just one Exporter Certificate
• For short term financing over 100% is eligible if over 50% is US content

13. UNITED STATES SHIPPING REQUIREMENTS
• Large US EX-IM Bank financings require that goods are shipped in US flag
vessels - 100% of US EX-IM Bank financed seaborne cargo must move in
provately owned US flag vessels
• 100% of US flag cargo cost is financeable by EX-IM Bank
• Ports of call and vessels flags may NOT be in countries where the US has
sanctions (e.g. Iran and North Corea)
• It is important to create a correct shipping plan
• MARAD (US Maritime Administration) is involved and you need to
coordinate with them for a correct shipping plane
• Reachback is allowed; compensation for mistakes (non allowed shipments)
is allowed

14. PHASES OF ECA APPLICATION PROCESS
• Optional Letter of Interest
• Complete application received by the Borrower
• Contact with the Borrower
• Financial analysis and due diligence
• Documentation negotiation / agreed and signed
• Conditions precedent satisfied
• Everything is operative!
• First disbursement
• NB it is quite important that all eventual sub-suppliers know that an ECA financing is in place / so sub-
supplier should comply with requirements - calculate % of (home / local / foreign) content and be ready
to prepare ECA compliant and ECA required corrected documents , follow the corrected procedures of
purchasing

15. ECA DISBURSEMENT PROCESS
• Goal: present proof of origin of the goods / payments /invoices / shipments
• Three disbursement methods: reimbursement, LC, direct payment
• Reimbursement: presentation of corrected documents  Buyer pays
contractor the down payment and Bank pays contractor the rimanent amount
• Procurement should provide information about orders/ origin of goods (
monitor content eligibility) / certificate of origin / shipments / bills of lading /
proofs of payments - it is important a continuous monitoring of eligibility
and designing a procurement coordinator
• Choose disbursement date / disbursement amount / invoices / prepare
disbursement package / submit disbursement package  discrepancy in this
set can delay receiving of funds
• Disbursement request shall be signed by the Borrower and be compliant with
loan agreement

16. ECA CASH FLOW
• Some ECA are financing also reachback costs (costs incurred before
financial closing), but recovering them can be tricky
• For some ECA progress payment cannot be disbursable
• Eca may want to approve payment schedules early
• Time to prepare financial documents is not istantaneous (time to
document the conditions precedent/ make the loan operative/ review all
the disbursement package)
• Cash flow can be studied taking into consideration payments towards
suppliers - goal: minimizing cash shortfall
• In case of multiple financing, multiple tranches