(Business Standard, Delhi, 11 April 2024) The Ministry of Finance has written to the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority of India (Irdai) to monitor export credit availability, and insurance premium increases to help Indian exporters deal with trade disruptions in the Red Sea due to Houthi attacks on cargo ships.
ECAWatch Newsletter 4
Proposed EXIM (Export-Import Bank) Reforms
(JDSUPRA, Sausalito, 16 April 2024) The U.S. Export-Import Bank (EXIM) is among the most impactful government agencies when it comes to helping U.S. companies compete for business internationally, finance domestic manufacturing, and build resilient supply chains. Up until 2019, EXIM policies and products were little changed despite the U.S. economy evolving dramatically away from traditional manufacturing to a technology and services-dominated economy. As a result, EXIM users are calling for EXIM to be more relevant and adaptable to our 21st-century economy. Lawmakers are hearing these calls and becoming more receptive to EXIM reform. For example, in 2019, Congress gave EXIM a mandate to bolster U.S. company competitiveness concerning China. EXIM users applauded. More reforms are under consideration in Washington.
China denounces U.S. shipbuilding probe as politically motivated ‘mistake’
(Yahoo Finance, Washington, 18 April 2024) China late Wednesday called on the United States to end its investigation into its shipbuilding industry, denouncing the probe as a politically motivated “mistake.” The official statement from China’s Ministry of Commerce was issued hours after U.S. President Joe Biden discussed the investigation during a speech he gave Wednesday at the United Steelworkers headquarters in Pittsburgh, Pa. The unfair practices alleged include policy loans from state-owned banks, equity infusions and debt-for-equity swaps, the provision of steel from state-owned steel producers at below market value, tax preferences, grants and “lavish financing from China’s state-owned export credit agencies,” among others.
Ukranian ECA helped exporting companies raise UAH 99.8 mln
(Open 4 Business, Kyiv, 20 April 2024) As of April 1, 2024, the Export Credit Agency (ECA) supported Ukrainian exports by UAH 627 million (US$15.8m), which allowed the country’s exporters to attract UAH 99.8 million (US$2.5m) in financing from partner banks in cooperation with the agency, said Taras Kachka, Deputy Minister of Economy and Trade Representative of Ukraine. “Supporting and developing processing companies that export their products to other countries is one of the priorities of the Made in Ukraine state policy.”
International lawyers advise ECA and international lenders in Latin American finance
(Latinvex, Miami, 24 April 2024) Milbank represented a consortium of export credit agencies and international lenders in connection with the $2.5 billion project financing for the $4.5 billion expansion of the Centinela copper mine in Chile and Mexican lending company MNJ Capital on a $500 million secured credit facility; Clifford Chance advised the lenders on a $500 million secured loan to Colombian investment manager Grupo SURA; Cleary Gottlieb represented Mexican glassmaker Vitro in a $100 million term loan with Netherlands-based ING Bank; Simpson Thacher represented Brazilian technology platform Brandlovrs Inc. in connection with an equity investment round led by Brazilian venture capital firm Kaszek and Arnold & Porter advised Canada-based Vela Industries Group in the acquisition of Chile-based fleet management, machine performance, and telematics software and hardware provider Samtech. Norton Rose Fulbright advises lenders on ECA-backed financing for two new LNG-powered ‘World Class’ cruise vessels for MSC Cruises.
U.S. EXIM Bank approves ‘Make More in America’ initiative to boost manufacturing
(Reuters, Washington, 14 April 2024) The U.S. Export-Import Bank’s board on Thursday voted to approve a new tool aimed at boosting U.S. manufacturing, strengthening closing critical supply chain gaps, and supporting American jobs, the U.S. official export credit agency said. The Make More in America initiative will allow companies to tap existing medium- and long-term loans and loan guarantees for export-oriented domestic manufacturing projects as part of President Joe Biden’s push to bolster U.S. supply chains.
REC Ltd Secures Japanese Green Loan from Italy’s SACE
(GK Today, India, 27 April 2024) REC Ltd, a Maharatna Central Public Sector Enterprise (CPSE) and leading Non-Banking Financial Company (NBFC) under the Ministry of Power, Government of India, has successfully availed a green loan of Japanese Yen (JPY) 60.536 billion (approximately Rs 3,200 crore) to finance eligible green projects in India. The green loan facility benefits from an 80% guarantee by SACE under their innovative Push Strategy programme. It makes SACE’s first JPY-denominated loan transaction and first green loan in India. The loan saw participation from banks across Asia, US and Europe, including Crédit Agricole CIB, Bank of America, Citibank, KfW IPEX-Bank and Sumitomo Mitsui Banking Corporation as Mandated Lead Arrangers. Credit Agricole CIB is acting as the ECA Coordinator, Green Loan Coordinator, Documentation Bank and Facility Agent.
Geopolitical Tensions might Threaten India’s Export Growth, FIEO Urges Government Action
(Business Outlook India, New Delhi, 29 April 2024) Escalating geopolitical tensions may have implications for India’s exports in the first quarter of 2024-25 as it is likely to impact global demand, says the Federation of Indian Export Organizations. The global uncertainties caused by continuing war between Russia and Ukraine has impacted India’s outbound shipments in 2023-24, which recorded a decline of 3.11% to US$437 billion. Imports too dipped by over 8% to US$677.24 billion. Re the impact of the Israel-Iran war certain exporters from engineering sector have stated that the demand for goods that are going to the UAE and then to Iran has come down. “If the global situation continues to be like this, it will impact global demand. In the first quarter numbers, the demand slowdown may be visible,” FIEO Director General Ajay Sahai said. Further he asked for continuation of interest equalisation scheme which helps exporters from identified sectors and all MSME manufacturer exporters to avail of rupee export credit at competitive rates at a time when the global economy is facing headwinds. Exporters get subsidies under the ‘Interest Equalisation Scheme for pre- and post-shipment rupee export credit. “The rates should be enhanced to 3% & 5%” he said. “Due to demand slowdown, offtake of goods will be low so foreign buyers will also take a longer period to make payments. So we require funds for longer period. Exporters also need interest subvention support,” Sahai said.
China invites Uganda for talks on crude oil pipeline project financing
(Dispatch, Kampala, 5 April 2024) Uganda’s presidency confirmed that China has extended an invitation to Uganda’s Energy minister to visit Beijing for discussions on the country’s $5 billion 1,445-km (898-mile) crude oil pipeline project. This development offers hope for progress in Uganda’s efforts to secure Chinese financing for the pipeline, crucial for kickstarting crude production from oilfields discovered back in 2006. The potential involvement of Chinese funding gains significance as Western banks have refrained from financing the project following pressure from environmentalists, citing concerns over its impact on global carbon emissions. Prior discussions between Uganda and the Chinese export credit agency SINOSURE regarding potential funding for the project had been ongoing. However, several deadlines for concluding these talks had passed without reaching a resolution. Meanwhile, construction activities for the pipeline have commenced, involving the transportation of pipes and other materials to designated sites in both Tanzania and Uganda.
ECAs & Aviation Finance & Leasing: Global overview
(Lexology, London, 4 April 2024) The outlook for the aviation industry in 2024 is more positive than it has been for some years, despite the significant challenges ahead. To fill the subsequent funding gap, the ECAs (and, indeed, the manufacturers themselves) stepped up to the plate, but are now not needed as much. According to Boeing’s Commercial Aircraft Finance Market Outlook 2023, sources of industry delivery financing for 2022 can be broken down as follows: sale and leaseback:18%; cash:54%; capital markets:9%; bank debt:15%; and export credit:4%. ECA-guaranteed loan products covered only about 4% of new aircraft financings in 2019, substantially down from previous years, principally as a result of the restriction of the operations of UX EX-IM Bank and the European ECAs for several years. By the end of 2021, ECA support had increased to 9% of funding for the industry and nearly 5% cent of Boeing deliveries. Primary ECA financing comes from: Brazil: Brazilian Development Bank – supports Embraer; Canada: Export Development Canada – supports Bombardier and Pratt & Whitney; France: Bpifrance – supports Airbus and ATR; Germany: Euler Hermes – supports Airbus; United Kingdom: UK Export Finance – supports Airbus and Rolls-Royce; and United States: Export–Import Bank of the United States (US EX-IM) – supports Boeing, CFM, IAE, GE and Pratt & Whitney.
