2010 Competitiveness Report - Export-Import Bank of the United ...

Chapter 4: Major Program Structures
Section C: Co-Financing
Introduction
“Co-financing,” “reinsurance,” and “one-stop shop” address some of the financing
challenges posed by multi-sourcing. These terms refer to financing arrangements that allow
an exporter to market a single ECA financing package to a buyer interested in procuring
goods and services from two (or more) countries. Without co-financing, foreign buyers
would need to secure multiple financing packages and would incur additional expense and
administrative burden to ensure ECA support for exports from various countries.
With co-financing, the lead ECA provides the applicant (buyer, bank or exporter) with
export credit support for the entire transaction. Behind the scenes, the follower ECA
provides reinsurance (or a counter-guarantee) to the lead ECA for the follower ECA’s share
of the procurement. The country of the largest share of the sourcing and/or the location of
the main contractor generally determines which ECA leads the transaction. The lead ECA is
able to provide a common documentation structure, one set of terms and conditions, and
one set of disbursement procedures for the entire transaction. All parties benefit from the
administrative ease of a streamlined financing package. As the surge in use of Ex-Im Bank
co-financing agreements stabilizes and availability and ease of ECA co-financing becomes
routine, new competitive factors, including ECA willingness to address co-financing requests
involving emerging ECAs as potential co-financing partners, are being evaluated.
Ex-Im Bank’s Policy and Practice
Ex-Im Bank introduced the co-financing program in 2001 with the signing of its first
bilateral agreement with ECGD (UK). Since that time, Ex-Im Bank has signed eleven cofinancing
agreements 1 and approved case-specific co-financing arrangements on a
transaction basis with OECD ECAs with whom Ex-Im Bank does not have an overall cofinancing
framework agreement. Ex-Im Bank has not signed any co-financing agreements
with ECAs in the BRIC countries or Mexico, but could consider individual requests to cofinance
with these ECAs on a case-by-case basis.
In 2010, aircraft continued to lead the co-financing program as it constituted the majority of
the overall number and volume of activity in 2010. As such, approximately $6.5 billion, or
over 98% of the volume of all 2010’s co-financed transactions, involved some type of
aircraft. Specifically, Ex-Im Bank provided co-financing support for 15 large or OECD
Category 1 aircraft and 14 small Category 3 aircraft transactions, including agricultural
aircraft. In the majority of the aircraft transactions, without co-financing the exporter
would not have been able to offer the maximum 85% support to its customers in one
financing package. Thus, co-financing allowed Ex-Im and NEXI to level the playing field by
acting like the Airbus ECAs do in terms of their seamless financing for the European-based
commercial aircraft manufacturer.
1 Ashr’a (Israel), Atradius (The Netherlands), Coface (France), ECGD (UK), EDC (Canada), EFIC
(Australia), EKF (Denmark), Hermes (Germany), KEXIM (Korea), NEXI (Japan), and SACE (Italy).
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