EDC AT A GLANCE - Export Development Canada (EDC) · PDF fileEDC AT A GLANCE ›About EDC ... EDC at a Glance - Export Development Canada (EDC) Author: EDC Subject: EDC at a Glance

APRIL 2015

EDC AT A GLANCE

› About EDC … mandate, locations, solutions

› 2014 Performance Highlights

› A few definitions

› EDC solutions, applied

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OUTLINE

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› Canada’s Export Credit Agency

› Crown corporation wholly owned by

Government of Canada

› Financially self-sustaining

› Operates on commercial principles

ABOUT EDC

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› To support and develop Canada’s

export trade and international

business efforts

› Financing and insurance

solutions for Canadian exporters

and investors

EDC’S ROLE

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EDC'S OVERARCHING PRINCIPLES

Partnership-Preferred Philosophy

› Leverage our financial capacity to

complement the activities of the private-sector

financial institutions to ensure that customers

can access financial solutions best suited

to their needs

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EDC'S OVERARCHING PRINCIPLES

Corporate Social Responsibility

› CSR is more than just compliance with policy or

regulation; it is the integration of values such as

honesty, respect, fairness and integrity into our daily

business practices

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EDC’S FOREIGN REPRESENTATION

North America $54.5B (55%)

Asia-Pacific $17.9B (18%)

Europe $13.5B (14%)

South / Central America $8.4B (9%)

Africa / Middle East $4.5B (5%)

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CONNECTING WITH CANADIAN BUSINESSES

ACROSS CANADA

› Facilitated $99.0 billion in business carried out by Canadian companies

› Served about 7,400 customers

› Supported business in 198 countries

› Facilitated $29 billion in emerging markets

› Contributed to 4% of GDP, supporting 719,200 jobs

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2014 PERFORMANCE HIGHLIGHTS

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EDC SOLUTIONS

Exporters’ risks to be mitigated or needs to be met:

2014 CAD Billion

Risk of not getting paid CI 67 (68%)

Need financing for themselves or their buyer FIN 22 (22%)

Need to guarantee their performance CIB 7 (7%)

Risk of losing their investment abroad PRI 3 (3%)

99

CI: Credit Insurance

FIN: Financing

CIB: Contract Insurance and Bonding

PRI: Political Risk Insurance

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Source: EDC Data 2013, as of December 2013

BUSINESS FACILITATED BY SECTOR TEAM (IN BILLIONS)

30

25

20

15

10

5

0

10.8

22.7

7.7

24.9

7.8

21.5

$ B

illio

ns

Sector

Infrastructure and Resources Extractive Transportation Information and Light Environment Communication Manufacturing Technology

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EXPORTER MARKETPLACE

5,000–10,000 Pre-exporters

38,400 total exporters, based on export sales

[ + 20,000 (est.) indirect exporters]

1,200 Med/Large Exporters (export sales >$25M)

Established Exporters ($5M < export sales < $25M) 2,600

5,300 Growth Exporters ($1M < export sales < $5M)

17,300 Evolving Exporters (export sales > $100K)

Sources: - Statistics Canada, International Trade Division, 2010 Exporter Register Database

- Industry Canada, Small Business Branch, Survey on financing and growth of SMEs, 2011

($100K < export sales < $1M) 12,000

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DIRECT VS INDIRECT EXPORTS

Aerospace sector supply chain

Foreign operators Airlines, couriers, governments, private corp., etc.

Canadian OEM (e.g. Bombardier Aerospace)

Cdn tier 1 “Integrators” Major components: turbines, avionics,

airframe, landing gear, etc.

Cdn tier 2 supplier Minor components:

e.g. Interiors

Cdn tier 3 suppliers Generic equipment, metal work, toolers,

composites, carpeting, etc.

Aftermarket Service/Parts – Canadian & Int’l suppliers & vendors

Foreign tier 1 Major components: turbines, avionics,

airframe, landing gear, etc.

Foreign tier 2 Minor components:

e.g. Interiors

Foreign OEM (e.g. Airbus, Boeing, Embraer)

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HOW WE FULFILL OUR ROLE

Commercial focus

Credit risks

Performance risks

International Guidelines

WTO

Consensus Arrangement

Berne Union

EDC Policies

Canadian Benefits

Corporate Social Responsibility

› Exporter Inc. is a Canadian company

› Started locally and now sells across Canada

› Domestic market saturated and sales have been flat

› Considering changing business model to include exporting

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STORY … EXPORTER INC.

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› Situation: Contract in Mexico

› Need: worried about non-payment

› Solution: EDC insures single contract

› Benefit: Risk of not getting paid covered

EXPORTER INC. LOOKING TO GROW

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PAYMENT RISK COVERED

Exporter

Contract

Foreign Buyer

EDC

Single Buyer

Policy

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› Situation: exporting business

growing

› Need: additional financing

› Solution: CI to free up security

under operating line

› Benefit: Risks covered and more

short term financing available to

grow business

MEXICO SALES GROWING

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INSURANCE FREES UP OPERATING LINE

EDC

AR

Policy

Exporter

Contract

Foreign Buyer

Canadian Bank

Assigned

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EDC SOLUTIONS

Exporters’ risks to be mitigated or needs to be met:

2014 CAD Billion

Risk of not getting paid CI 67 (68%)

Need financing for themselves or their buyer FIN 22 (22%)

Need to guarantee their performance CIB 7 (7%)

Risk of losing their investment abroad PRI 3 (3%)

99

CI: Credit Insurance

FIN: Financing

CIB: Contract Insurance and Bonding

PRI: Political Risk Insurance

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› Situation: New buyers want financial or

performance guarantees

› Need: Operating line tied up by guarantees

› Solution: EDC backstops performance and

financial risk for bank

› Benefit: Operating line not tied up by guarantee

COMPANY TAKING OFF IN MEXICO

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EDC BACKSTOPS PERFORMANCE

Exporter

Contract

Foreign Buyer

Letter of Credit

Advise

Confirm

Foreign Bank Security

EDC

Guarantee

Security X

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EDC SOLUTIONS

Exporters’ risks to be mitigated or needs to be met:

2014 CAD Billion

Risk of not getting paid CI 67 (68%)

Need financing for themselves or their buyer FIN 22 (22%)

Need to guarantee their performance CIB 7 (7%)

Risk of losing their investment abroad PRI 3 (3%)

99

CI: Credit Insurance

FIN: Financing

CIB: Contract Insurance and Bonding

PRI: Political Risk Insurance

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LARGE ORDER

Situation: Financial capacity constraint

to take on new contract

Need: Additional inventory, staff and

sub-contractors

Solution: EDC backstops bank’s

contract specific, one-off or “bulge”

facility to specifically support Work

in Progress

Benefit: Work in Progress is supported

until delivery & payment

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GUARANTEE IN SUPPORT OF INTERNATIONAL SALES

EDC

Exporter

Contract

Foreign Buyer

Canadian Bank

Guarantee

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BUYER ASKS FOR FINANCING

Situation: The RFP includes

a financing requirement

Need: Term financing for

the buyer

Solution: EDC buyer loan

Benefit: Exporter gets paid by EDC

upon delivery, buyer has additional

source of financing

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DIRECT LOAN TO BUYER

EDC

Loan

Exporter

Contract

Foreign Buyer

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EDC SOLUTIONS

Exporters’ risks to be mitigated or needs to be met:

2014 CAD Billion

Risk of not getting paid CI 67 (68%)

Need financing for themselves or their buyer FIN 22 (22%)

Need to guarantee their performance CIB 7 (7%)

Risk of losing their investment abroad PRI 3 (3%)

99

CI: Credit Insurance

FIN: Financing

CIB: Contract Insurance and Bonding

PRI: Political Risk Insurance

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› Situation: Demand outstripping

domestic capacity

› Need: Require financing to build new plant

› Solution: EDC uses financial network

to arrange loan and insure foreign

affiliate’s receivables

› Benefit: additional financing to

expand business

LOCAL MANUFACTURING FACILITY NEEDED

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EDC and CDIA

Foreign Bank

Guarantee

AR Policy

EDC

Canadian Bank

Guarantee

Foreign Buyer

Contract

Exporter Foreign Subsidiary

Loan

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EDC SOLUTIONS

Exporters’ risks to be mitigated or needs to be met:

2014 CAD Billion

Risk of not getting paid CI 67 (68%)

Need financing for themselves or their buyer FIN 22 (22%)

Need to guarantee their performance CIB 7 (7%)

Risk of losing their investment abroad PRI 3 (3%)

99

CI: Credit Insurance

FIN: Financing

CIB: Contract Insurance and Bonding

PRI: Political Risk Insurance

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› Looking to repeat model in India

› Access EDC’s extensive network:

banks, government, buyers

› Help Exporter Inc. build successful

market entrance strategy (new plant,

intro to buyers, market info)

› Exporter Inc.’s success is EDC’s

success

BUILDING ON SUCCESSFUL MODEL

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EDC’s “PULL” transactions

EDC

Loan

Exporter

Contract

Foreign Buyer

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EDC SOLUTIONS

Exporters’ risks to be mitigated or needs to be met:

2014 CAD Billion

Risk of not getting paid CI 67 (68%)

Need financing for themselves or their buyer FIN 22 (22%)

Need to guarantee their performance CIB 7 (7%)

Risk of losing their investment abroad PRI 3 (3%)

99

CI: Credit Insurance

FIN: Financing

CIB: Contract Insurance and Bonding

PRI: Political Risk Insurance

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QUESTIONS?