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a March 18, 2009
a
March 18, 2009
Who’s Still Lending?
Non-Commercial Sources of Financing for Exports
and Foreign Investment
Outline Exports and foreign investment “Non-commercial” Why is this topic important? Non-commercial sources of financing
Exports and foreign investment
Exports: Well…no need to explain Foreign investment: FDI, not portfolio Focus, therefore, on private-sector activity
U.S. exporters U.S. firms making foreign direct investments
“Non-commercial” On the one hand, commercial banks
First American, Fifth Third, Chase, RBS, Wells Fargo/HSBC, Bank of Montreal, National City, etc.
On the other hand, government-owned financial institutions: “non-commercial” Export credit agencies, multilaterals, regional
development banks, etc. Most are able to support private-sector trade and
investment
Key issue: Relative appetites for risk
Why is this topic important? Exporters like to get paid (!) Many foreign investors leverage their
equity investments with debt financing Some foreign investors want equity
partners Today’s global commercial banking
system is severely stressed out Commercial lenders seem a bit shy these days
Institutions Export-Import Bank of the United States
(Ex-Im Bank)
Overseas Private Investment Corporation (OPIC)
International Finance Corporation (IFC) of the World Bank
Institutions Inter-American Development Bank (IDB)
Asian Development Bank (ADB)
African Development Bank (AfDB)
European Bank for Reconstruction and Development (EBRD)
Institutions Yes, there are others, for example
Corporación Andina de Fomento (CAF) Mixed public/private ownership
Banco Centroamericano de Integración Económica (BCIE)
These institutions Provide much-needed liquidity to the
global system of trade and investment Benefit for U.S. exporters
Facilitation of trade finance in difficult markets Support of large capital projects
These institutions Benefit for FDI
Some invest directly in private-sector ventures Some invest (or lend to) private equity funds
All are focused on emerging markets/developing countries
Ex-Im Bank [Separate presentation by Michael
Howard, Midwest Regional Director of Ex-Im Bank]
Overseas Private Investment Corporation (OPIC)
Based in Washington, D.C. U.S. Government agency Supports U.S. private investment (FDI) in
developing countries Loans and loan guarantees for U.S.-invested
ventures Loans to regional equity funds
OPIC In 2007:
Supported 139 projects Direct-loan portfolio at year end: $ 641 million
No trade finance program per se
International Finance Corporation (IFC)
Based in Washington, D.C. Part of the World Bank Group
World Bank owned by 185 member countries Focused on private-sector in developing
countries Direct loans Equity investment, including funds
IFC Total 2008 loan/investment commitments:
$16 billion $11 billion directly Mobilized an additional $5 billion
Global Trade Finance Program IFC guarantees importers’ L/Cs and other
instruments to facilitate trade
IFC: Global Trade Finance Program
IFC: Global Trade Finance Program Countries with L/C issuing banks in the
program Argentina Egypt Pakistan Russia South Africa Ukraine Vietnam Many others
IFC: Global Trade Finance Program U.S. L/C confirming banks in the program
ABN AMRO Bank of America Harris/Bank of Montreal Citibank Chase Standard Chartered Bank Wells Fargo HSBC Trade Bank Many others
Inter-American DevelopmentBank (IDB)
Regional development bank Based in Washington, D.C. Owned by 48 member countries
Including U.S. and others outside region Loans and loan guarantees for both public
and private sectors Equity investment, including funds
IDB Total 2007 loan and guarantee approvals:
$8.8 billion Private sector
$2 billion in loans/guarantees Mobilized an additional $2 billion $227 million under Trade Finance Facilitation
Program – TFFP Lines of credit to trade banks for guarantees of L/Cs
and other instruments
IDB: Trade Finance Facilitation Program
TFFP examples Panama: $10 million loan to Multibank, Inc. Paraguay: $5 million loan to Sudameris Bank El Salvador: $20 million loan to Banco Agricola Jamaica: $7 million loan to First Caribbean
International Bank Guatemala: $40 million loan to Banco
Industrial
Asian Development Bank Regional development bank Based in Manila, Philippines Owned by 67 member countries
Including U.S. and others outside region U.S. and Japan are largest shareholders
Loans and loan guarantees for both public and private sectors
Equity investment, including funds
ADB Total 2007 loan approvals: $8.2 billion
Plus $1.9 billion from Asian Development Fund Private sector
$865 in loans approved for non-sovereign borrowers
$80 million in equity investments
ADB Trade Finance Facilitation Program – TFFP
Guarantees to L/C confirming banks Revolving credit for regional exporters and importers
TFFP Issuing banks in Azerbaijan Bangladesh Cambodia Nepal Sri Lanka Vietnam and others
ADB U.S. confirming banks in TFFP
American Express Bank Bank of America Bank SinoPac Chang Hwa Commercial Bank Wachovia Several others
African Development Bank (AfDB)
Regional development bank Based in Tunis, Tunisia Owned by 77 member countries
Including U.S. and others outside region Loans and loan guarantees for both public
and private sectors Equity investment, including funds
AfDB Total 2007 loan approvals: $1.4 billion Private sector
$630 million in loans approved $117 million in equity investments
New Trade Finance Initiative: $1 billion Announced March 12, 2009
European Bank for Reconstruction
and Development (EBRD) Regional development bank
Central and Eastern Europe, Russia, and “the ‘Stans”
Based in London Owned by 61 countries and 2
intergovernmental institutions Including U.S. and others outside region U.S. is largest shareholder
EBRD Loans to both public and private sectors Equity investment, including funds Total 2007 commitments: €5.6 billion
86% of “business volume” in private sector Investment in equity funds: €400 million Profit of €1.9 billion in 2007
EBRD Trade Facilitation Programme
Guarantees of trade transactions 115 issuing banks in region 640 confirming banks world wide
Short-term loans to banks and factors for on-lending to regional exporters and importers
Financed €777 million in trade transactions in 2007
Corporación Andina de Fomento (CAF)
Sub-regional development bank Based in Caracas, Venezuela Owned by 16 governments and 15
commercial banks in the region 2007 investment and loan portfolio:
$10 billion
Banco Centroamericano deIntegración Económica (BCIE)
Sub-regional development bank Based in Tegucigalpa, Honduras Owned by member countries and others Largest financial institution in Central
America Supporting both public and private sectors 2007 disbursements: $3 billion
Conclusions Financing exports and FDI will be
challenging in 2009 Financing remains available from several
non-commercial sources However – they are not insulated from global
liquidity situation They raise funds in international capital markets
Lagging indicator in global recession? Commercial sources will come back…
Conclusions
In the meantime – it pays to shop around!
Web Sites Ex-Im Bank: www.exim.gov OPIC: www.opic.gov IFC: www.ifc.org IDB: www.iadb.org AfDB: www.afdb.org ADB: www.adb.org EBRD: www.ebrd.com CAF: www.caf.com BCIE: www.bcie.org
Who’s Still Lending?Non-Commercial Sources of Financing for
Exports and Foreign Investment
CONTACT INFO:Dean Ennes
Ennes International
(708) 445-0053
