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

Unlike most other ECAs, Ex-Im Bank does not require a formal bilateral framework
agreement before considering co-financing transactions. In 2010, Ex-Im Bank
supported two co-financing deals under a one-off co-financing agreement that involved
reinsurance from HEXIM (Hungary) to support power plants in Turkey and the Slovak
Republic. Additionally, recognizing the shift away from the typical structure of a cofinancing
transaction in which there is a single export contract, Ex-Im has created,
specific criteria that allows co-financing coverage to include wholly-foreign contracts
under its co-financing program as a carefully parametered “Associated Contracts”
structure. The “Associated Contracts” structure allows foreign buyers, arrangers or
financiers - in addition to U.S. exporters – to package multiple contracts that are
associated to a project (but may be functionally unrelated) into a single ECA financing
package. In 2010, Ex-Im Bank supported one co-financing deal under an Associated
Contract structure to support a power plant in Turkey. Ex-Im Bank is unique in offering
this structure; competitor ECAs require the foreign ECA-supported portion to be
explicitly included as part of the main, single export contract.
G-7 ECAs’ Policies and Practices
The G-7 ECAs have multiple framework agreements among themselves (as shown in
Figure 10) and have been processing co-financed transactions since 1995. These
agreements were originally designed to help European ECAs manage their exposure
because many had country limits that made it impossible for them to provide support
for exports to riskier markets or to markets where the ECA was close to reaching its
country limit. Even in an environment of increasingly liberalized foreign content
allowances, co-financing helps achieve operational efficiency and risk management in a
world of multi-sourcing.
Figure 10: G-7 Co-financing Agreements, 2010
Euler
Ex-Im ECGD EDC
COFACE SACE NEXI
Hermes
Ex-Im X X X X X X
ECGD X X X X X
EDC X X X X X
Euler Hermes X X X X X X
COFACE X X X X X X
SACE X X X X X X
NEXI X X X X
Source: U.S. Ex-Im Bank
Exporter and Lender Survey and Focus Group Results
Though participants appreciated Ex-Im’s willingness to engage in co-financing as both a
lead and follower ECA, especially with respect to large commercial aircraft financing
where co-financing support was described as “seamless”, exporters criticized Ex-Im
Bank’s significantly limited co-financing activity as a follower ECA. Moreover, when
Ex-Im does act as a follower ECA, exporters have expressed frustration with the
required up-front documentary requirements (as opposed to foreign ECAs’ streamlined
approach).
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