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U'S' ExIm Bank in India

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Title: U'S' ExIm Bank in India


1
U.S. Ex-Im Bank in India
  • Medical Fair India
  • March 2009

2
Introduction
  • U.S. governments official export credit agency
  • Mission is to support U.S. exports to promote
    U.S. jobs.
  • Since establishment in 1934, have supported more
    than 400 billion in U.S. exports.
  • In FY2008, supported financing for exports
    valued at over 14.4 billion.

3
Ex-Im Bank in India
  • Ex-Im Bank has provided financing to Indian
    borrowers in
  • Aviation
  • Telecom
  • Oil and Gas
  • Energy (including Renewable Energy)
  • Heavy Equipment (sales and leases)
  • Medical Equipment
  • Services (IT)

4
Ex-Im Bank in India (as of March 2009)
  • Ex-Im Bank India portfolio 3.95 billion
  • Breakdown of exposure by debtor type
  • Sovereign 1.5 billion
  • Public, Non-Sovereign 36 million
  • Private 2 billion

5
Example of Ex-Im Bank Supported Transactions in
India
  • Reliance Infocomm of Mumbai, India obtained 500
    million in financing from Citibank to purchase
    CDMA telecom equipment from Lucent.
  • Ex-Im Bank provided Citibank with a long-term
    loan guarantee for the transaction.

6
Example of Ex-Im Bank Supported Transactions in
India
  • Importers Software Services Inc of California
    shipped 2.4 million in trade management software
    to Helios and Matheson IT of Chennai, India.
  • The software enabled Helios clients to monitor
    their export-import activities to better manage
    their sales and purchases.

7
Example of Ex-Im Bank Supported Transactions in
India
  • Ranbaxy Laboratories Ltd. of New Delhi, India,
    purchased plastic pharmaceutical bottles and
    closures from Glass Company, Inc. of Boyertown,
    PA on 30-day terms using an Ex-Im Bank short-term
    insurance policy.

8
Example of Ex-Im Bank Supported Transactions in
India
  • GENERAL ELECTRIC HEALTHCARE OF WAUKESHA,
    WISCONSIN
  • received a single-sale, multiple shipment medium
    term insurance policy from Ex-Im Bank for U.S.
    Bank National Association financing for the
    export of a new GE MRI Scanner to MRI Scans
    Private Ltd of New Delhi, India. This 870,404
    transaction qualifies as a medical initiative
    under Ex-Im Bank's Medical Equipment Initiative
    Program. The equipment provides advanced
    diagnostic services to the surrounding community.

9
Air India
  • Ex-Im Bank has supported financing for Air
    Indias fleet renewal with the procurement of
    Boeing aircraft.

10
Upgrade of Jamnagar Refinery
  • Ex-Im Bank recently supported the U.S. content in
    the upgrade of Reliance Industries refinery at
    Jamnagar amounting to 500 million.

11
Special Sector Initiatives
  • Ex-Im programs offering special enhancements
  • Medical Equipment Initiative (MEI)
  • Environmental Exports Program (EEP)
  • Transportation Security Exports Program (T-SEP)

12
Medical Equipment Initiative (MEI)
  • Automatic Local Cost Cover Local cost financing
    available on automatic basis for local costs
    related to exporters scope of work and
    documented up to 15 percent of U.S. contract
    value.
  • Repayment Terms Terms up to seven years offered
    for medium-term transactions when consistent with
    expected life of product, subject to minimum
    contract value of 350,000.
  • Capitalization of Interest Interest may be
    capitalized when there is extended installation
    and/or construction period.

13
Export Support Types
  • Geared to U.S. exporters / banks
  • Working Capital Loan Guarantees
  • Short- Medium-Term Insurance
  • Geared to foreign buyers / banks
  • Medium- Long-Term Loan Guarantees
  • Structured Project Finance

14
Short-Term Export Credit Insurance
U.S. Supplier
Payment
Insurance
Goods / Services
Foreign Buyer
EX-IM
15
Export Credit Insurance
  • U.S. exporters apply for policy protection
    against foreign credit risk.
  • Coverage provided against commercial and
    political risk associated with default.
  • Raw materials and consumables coverage up to
    180 days.
  • Bulk agricultural products and light capital
    equipment coverage up to 360 days.
  • Capital goods terms from 360 days to 7 years.

16
Export Credit Insurance U.S. Content
Requirements
  • For Short-Term products, U.S. content in the
    contract is evaluated on an item by item basis.
  • Products must be manufactured in and shipped
    from the U.S.

17
Short-Term Credit Process
  • U.S. supplier submits application along with
    required information to establish credit limit
    for foreign buyer.
  • Info requirements from foreign company for
    credit limits
  • 10,000 credit favorable trade or bank reference
  • 10,000-50,000 credit current credit report
  • 50,000-100,000 credit current credit report
    plus favorable bank or trade reference
  • Greater than 100,000 credit current credit
    report, latest 3 years financial statements, and
    references
  • Ex-Ims Loan Officer analyzes application and
    makes decision on amount of credit to be
    supported.

18
Medium- and Long-Term Loan Guarantees
Payment
U.S. Supplier
Bank (U.S. or Intl)
Goods Services
Financials
Loan Guarantee
Foreign Buyer
EX-IM
19
Loan Guarantees
  • Covers commercial lenders against repayment
    risks on foreign buyers debt obligation.
  • Commits full faith and credit of U.S.
    government.
  • Loan fully transferable can be securitized.

20
Loan Guarantees
  • Protects 100 of principal and interest on 85
    of commercial contract foreign buyer required
    to make 15 cash payment.
  • Negotiated interest rate between Master
    Guarantee Agreement (MGA) bank and foreign buyer
    (fixed or floating) usually floating rate based
    on spread over 6-month U.S. dollar LIBOR rate.

21
Medium- and Long-Term Loan Guarantees
  • Medium-Term Loan Guarantees generally used for
    U.S. capital equipment, projects, and services
    up to 5-year and exceptionally 7-years repayment
    terms.
  • Long-Term Loan Guarantees generally used for
    buyer financing of very large items and project
    finance over 7-year repayment terms (up to 10
    years and occasionally 12 years to 15 years) or
    over 10 million.

22
Medium-Term credit standards
  • Positive Operating Profit during last 2 years
  • Positive Net Income during last 2 years
  • Positive Cash-Flow-From-Operations (latest year)
  • EBITDA/Debt Service gt 150
  • Total Liabilities/Total Net Worth lt 175
  • Ex-Im Exposure/Total Net Worth lt 40
  • Borrowers meeting above standards likely to be
    approved. If borrower misses one or more of
    standards, Ex-Im will conduct further analysis of
    borrowers business to determine whether to grant
    approval.

23
Military Restrictions
  • No Defense Articles or Services
  • Exceptions
  • Humanitarian purposes
  • Drug interdiction
  • Dual-use items

24
Standard Finance Model
  • Net contract price 1,000,000
  • Cash payment (150,000)
  • Financed portion 850,000
  • Exposure fee _at_ 5 42,500
  • Total financed
    892,500

25
Exposure fee
  • Determined by
  • Country risk
  • Percent of cover
  • Drawdown period
  • Repayment period
  • Fee financed
  • Timing of fee payment
  • General credit risk of the borrower

26
Contact information
  • Ex-Im web site www.exim.gov
  • Business Development
  • Talaat Rahman, Middle East Asia
  • E-mail Talaat.Rahman_at_exim.gov
  • Tel 1-202-565-3911
  • Fax 1-202-565-3961
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