(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.
Newsletter
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.
Trafigura bags US$560mn ECA-backed deal to supply gas to Japan
(Global Trade Review, London, 4 April 2024) Global commodity trader Trafigura has secured a US$560mn facility from Japan’s export credit agency and SMBC that will fund the delivery of natural gas to the East Asian country. The transaction, signed on March 27, comprises a US$390mn loan from the Japan Bank for International Cooperation (JBIC) alongside co-financing from SMBC worth approximately US$170mn. The deal, the latest in a spate of export credit agency (ECA)-backed transactions for major commodities traders, will finance the import of liquefied natural gas (LNG) into the Japanese market.
How the U.S. Can Still Meet its Global Climate Finance Pledges
(Natural Resources Defense Council, New York, 15 April 2024) In 2021, President Biden committed to increase U.S. international climate finance to over $11.4 billion per year by 2024. Of this, $3 billion per year was committed to investments in adaptation—historically underfunded—as part of the President’s Emergency Plan for Adaptation and Resilience. f delivered, this vital funding would spur much-needed emissions reductions in other countries, help the most vulnerable communities who have done the least to contribute to the climate crisis to adapt to its mounting impacts, and protect Americans and people around the world against the physical, economic, and security threats of climate change. It would also reinvigorate U.S. climate leadership, rebuilding trust with developing countries and catching up with other G7 countries who provide much more climate finance relative to their wealth. In mid-March, Congress finally passed the relevant spending bill for Fiscal Year 2024. It contained just $1 billion in dedicated funding for international climate programs. This is the third year in a row that Congress has failed to sufficiently deliver on U.S. international climate finance commitments. Just $1 billion in a spending package totaling $1.59 trillion sends a damaging message to the rest of the world.
Public Enemies: Assessing MDB & G20 IFIs energy finance
(Price of Oil, Washington, 9 April 2024) This new report, “Public Enemies: Assessing MDB and G20 international finance institutions’ energy finance” looks at G20 country and MDB traceable international public finance for fossil fuels from 2020-2022 and finds they are still backing at least USD 47 billion per year in oil, gas, and coal projects. The findings reveal that the wealthiest G20 nations are the primary culprits behind continued investments in fossil fuels, with Canada, Korea, and Japan emerging as the worst offenders. The report also highlights where there has been momentum to end international public finance for fossil fuels, finding that if countries keep their existing commitments to end not only coal finance but also oil and gas finance, it would shift $26 billion annually out of fossil fuels by the end of 2024. Download the 38 page Report
High-Level EU Conference: ‘Net-Zero by 2050: The Role of Export Finance’
(European Commission, Brussels, 25 April 2024) A High-Level Conference ‘Net-Zero by 2050: The Role of Export Finance’, organised by the European Commission’s Directorate-General for Trade, was held on 25 April 2024 at the Thon Hotel (Rue de La Loi 75, 1040 Brussels) and online. This conference (was) an occasion to report on progress made by EU Member States following the Council Conclusion of March 2022 on export credits, which included an ‘EU climate pact for export finance’. The web site is closed and no information on conclusions, proceedings or minutes have (yet) been published by the Commission at this time. Speech by Executive Vice-President Dombrovskis at the high-level conference ‘Net-Zero by 2050: The Role of Export Finance’ Conference agenda from March What’s New
