Financing via Export and Agency Finance (ECA) - Citibank

1 Treasury and Trade Solutions Georges Romano ECA LatAm Head Financing via Export and Agency Finance (ECA) Characteristics and Benefits Table of Contents 1. Agency Financing Overview 2. Latest Developments 3. How and When to Use EAF 4. Select Case Studies A. EAF Case Studies for Global Clients B. EAF Case Studies for Sellers of Strategic Commodities C. EAF Case Studies for Financial Institutions D. EAF Case Studies for Public Sector E. EAF Case Studies for Aviation F. EAF Case Studies for Energy and Power 5. Citi s Export and Agency Finance LatAm Team 1. Agency Financing Overview 2. Latest Developments 3. How and When to Use EAF 4.

2 Select Case Studies A. EAF Case Studies for Global Clients B. EAF Case Studies for Sellers of Strategic Commodities C. EAF Case Studies for Financial Institutions D. EAF Case Studies for Public Sector E. EAF Case Studies for Aviation F. EAF Case Studies for Energy and Power 5. Citi s Export and Agency Finance LatAm Team The Three Types of Official Agencies There are three main types of Official Agencies: (1) Multilateral Agencies, (2) Bilateral Agencies, and (3) National Export Credit Agencies. Their type of support ranges from totally untied to completely tied to national interest. Multilateral Agencies (MLAs) Bilateral Developmental Finance Institutions (DFIs) National Export Credit Agencies (ECAs)

3 MLAs are owned by multiple governments They promote sustainable economic and social development in their low-income member countries Examples include the World Bank Group, Asian Development Bank, Inter-American Development Bank, and the European Investment Bank DFIs are owned by singular governments They are tasked with promoting sustainable economic and social development Examples include FMO of the Netherlands, DEG of Germany, Proparco of France and OPIC of the US Their programs may sometimes be tied to their owner government s national interests ECAs are owned by singular national governments and are mandated to promote their country s exports Some ECAs also offer broader national interest programs which go beyond merely promoting their country s exports, such as supporting companies from their home country invest abroad, or Financing nationally strategic imports into their home country OECD ECAs follow the OECD Export Credit Consensus Guidelines Some OECD ECAs offer a subsidized fixed rate of Financing .

4 Called the Commercial Interest Reference Rate (CIRR) Examples of ECAs include USEXIM, JBIC, KSURE, EULER HERMES 4 Who Uses Official Agency Finance ? Citi has helped all kinds of users arrange Official Agency Finance , from private project sponsors to sovereign governments. Depending on your need, Citi will identify the Official Agency (s) with the best fit solution. National Sovereign Governments Sub-Sovereign Agencies and State-owned Enterprises Municipal/Local/Provincial Governments Utility Companies and Operators Private/ Independent Project Sponsors Listed Companies Privately Held Companies Operating Lessors Financial Institutions 5 Which Commercial Activities Qualify for Agency Support?

5 Citi s clients qualify for Official Agency support in a number of ways, depending on their business operations and commercial and financial needs. Citi helps our clients identify how to qualify for the best fit Agency program(s). Strategic Raw Commodities Environmental Sustainability Transportation/Logistics Social Development International Trade Capital/Heavy Equipment 6 An Alternative Source of Capital: From Equity to Senior Debt Official Agency Financing can be harnessed right across the capital spectrum, from equity to long-term senior secured debt. It can also be used for short-term working capital financings, such as receivables discounting.

6 Equity Mezzanine Debt Receivables Financing Project/Non-Recourse Debt Full-Recourse Debt Usually only available from DFIs and MLAs Will be subject to DFI and MLA eligibility/focus criteria: Environmental/labor/social standards Positively promote social/economic development in developing member countries ECA programs help their exporters discounting banks take short-term commercial and political risk Some ECA Untied Programs can be used to support pre- Export commodity Finance Available from all Official Agencies Subject to the IFC Guidelines relating to social/ environmental/ labor standards Note OECD Export Credit Consensus Arrangement rules for project Finance Available from all Official Agencies Terms generally equal to or better than terms that the Obligor can obtain from commercial

7 Bank/bond market 7 1. Agency Financing Overview 2. Latest Developments 3. How and When to Use EAF 4. Select Case Studies A. EAF Case Studies for Global Clients B. EAF Case Studies for Sellers of Strategic Commodities C. EAF Case Studies for Financial Institutions D. EAF Case Studies for Public Sector E. EAF Case Studies for Aviation F. EAF Case Studies for Energy and Power 5. Citi s Export and Agency Finance LatAm Team Activity in the Agency Financing Market Official Agency Financing has remained steady over the financial crisis and the recovery period. ECAs continue to support projects featuring home country exports in large volumes across the globe.

8 Source: US Ex-Im Competitiveness Report from 2013. 9 Asian Agencies Are Stepping Up Their Volumes and Activity Official Agencies from Asia are, in particular, champions in untied lending supporting overseas investments and other strategic national interests of their home countries. Source: US Ex-Im Competitiveness Report from 2013. 10 , , , , , , , , BankKSURECOFACEH ermes NEXISACE GIEKEKNKEXIMEKFG lobal Official Agency Financing Activity In the Last Year Sector 2014 Deal Volume ($ Billions) Deal Examples Oil and Gas Upstream oil and gas ( oil and gas rigs, including off shore drill rigs) Midstream oil and gas ( pipelines, LNG storage) Aviation and Shipping Commercial aircraft Non-military use helicopters ( service helicopters service off-shore oil and gas sector) Vessel Financing ( LNG vessels, ultra deep water drill ships, container vessels)

9 Power, Energy, Chemicals and Mining Equipment Financing into conventional power generation plants ( natural gas) Related infrastructure: transmission and distribution lines, energy storage Alternative energy projects ( solar panels, turbines for hydro and wind farm projects) Government and Finance Transportation infrastructure ( toll roads, airports, ports, underground metro) Trade infrastructure ( shipping ports, rail projects, including rolling stock) Social infrastructure ( hospitals, water treatment facilities) Telecoms Cellular infrastructure, broadband internet infrastructure Other Industries Financing to financial institutions for on-lending activity Total ECA Guaranteed Source: Dealogic, December 8, 2014.

10 Top ECAs by 2014 Loan Guaranteed Volume ($ in Millions) 2014 By Sector 2014 By Sector PECM, 29%Government & Finance , 15%Aviation,9%Oil & Gas, 28%Shipping, 13%Telecoms, 4%Other, 3%Americas28%Asia Pacific23%EMEA50%11 Financings Cost Comparison ECA Financing s guarantees from highly rated agencies typically offers the lowest all-in cost of capital for most clients. Non-recourse structures price at a small premium above corporate guaranteed structures as demonstrated below. Corporate Solution Interest Margin Annual Premium Upfront Fee Tenor1 12 years All-in Cost 1 2 Notes: 1. Assumes availability of two years with repayment of 12 years weighted average life of seven years.