ECA-covered Financing Opportunities in the current environment Paolo Spada, Head of CEE CIB Global Transaction Banking Thessaloniki, 30 October 2015
ECA-covered Financing Opportunities in the current environment
Paolo Spada, Head of CEE CIB Global Transaction Banking
Thessaloniki, 30 October 2015
Agenda
ECA Financing opportunities
UniCredit in Central Eastern Europe offering
ECA-covered Financing
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What are Export Credit Agencies (ECAs) State-owned “credit risk” insurer
Government-owned or -controlled entity supporting export business by
providing insurance cover in connection with a commercial contract
Offering funding support (not valid for all ECAs)
ECA
Charged for the insurance cover
Payable upfront as a flat fee or financed under ECA facility
Depending on country risk (according to OECD from 01 – 7), borrower risk
category, currency, tenor of the loan and financing structure
ECA
premium
For political and commercial risks for the lending bank as well as for the
exporter
Generally in form of a guarantee (insurance policy character)
Insurance
cover
1 0 = low risk
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Direct lending to a foreign buyer or through its relationship bank for financing
of defined deliveries and / or services from Exporter; Soft loans on the basis of
concessional terms and conditions
Buyer’s credit and
“Soft loans”
ECA-covered without-recourse discounts of accounts receivables/invoices with
tenors over 2 years (out of a deferred payment supply contract)
Receivables
finance
ECA-covered deferred payment supply contracts including promissory notes/ bills
of exchange Supplier’s credit
L/C Post financing under ECA guarantee
L/C Confirmation under ECA guarantee
L/C discount of deferred payment schemes under ECA guarantee
Letter of Credit
ECA-covered products
Main characteristics of an ECA-covered financing Based on OECD regulations
Financing of exports of capital investment and consumer goods, and equipment
Min. 15% of the contract value payable as down- / interim payment
Max. 85% of the contract value plus 100% ECA Premium can be financed
Loan currency in EUR, USD or other selected convertible currencies
ECA guarantee minimises the political and commercial risk
Financing
support
Disbursement of the ECA loan pro rata delivery / service directly to the exporter or
reimbursement to the borrower
Starting point of the credit linked to the delivery or taking over of the supply / project
Repayment of principal in equal, consecutive, semi-annual or quarterly instalments
Disbursement
and repayment
Medium- to long-term financing (from 2 up to 18 years)
Floating or fixed interest rateInterest period of 6 months (or 3 months)
Grace period (6 months or 3 months)
Tenor and
interest rate
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ECAs typically provide comprehensive cover
Manufacturing risk Repayment risk
Offer Signing of
the contract
Delivery
Negotiation Production Credit period
Political risks
e.g. embargo, war,
moratorium,
political
circumstances
Commercial risks
e.g. insolvency,
protected default,
cancellation
of contract
Political risks
e.g. embargo, war,
moratorium,
confiscation of
goods, political
circumstances
Commercial risks
e.g. insolvency,
protected default
Cover options Manufacturing risk cover Repayment risk cover
Risks
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Win-win-situation
Reduction / Elimination of country risk and
payment risk of the importer ( ECA)
Financing solution as an competitive
advantage
Immediate liquidity (cash)
Improvement of balance sheet & accounting
ratios (KPIs)
Attractive long-term financing (ECA-cover!)
More attractive terms and conditions in
comparison to traditional financing opportunities
Tailor-made financing solutions
Diversification of debt portfolio
ECA-covered financing is also available in
difficult economic environment
One of the major source of financing in capital-
intensive projects with international component
ECA-covered financing is key in Project Finance
with multicomplex and multi-sources financing
structures
exporter importer
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Low risk & RWAs despite „non-investmentgrade
focus“ due to ECA-cover for commercial and
political risk
Attractive KPIs
Special funding solution applicable
ECA covered financing can be provided only by
eligible banks, i.e. approved by the given ECA
based on credit quality, experience and track
record
bank
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ECA-covered financing is a balancing act Success = unified interests of all parties involved
Bank
Exporter
ECA
Importer
ECA:
cover provided basing on
comprehensive risk
assessment at a number
of levels: Importer
(Borrower) and his
business; underlying
transaction; sectoral and
country risks
depending on the purpose
of financing the proper
evaluation of environmental
risks may be required
(usually in form of
environmental due
diligence)
Bank:
In case of club deal one of
the lenders bank has the
role of ECA Agent
facilitating the dialogue with
ECA on documentation and
facility monitoring
The role of ECA Agent is
quite sensitive being the
facilitator of interests of
ECA, lenders and borrower
Documentation:
LMA based
ECA is not a party of the Loan Agreement, but some of ECA reviewing the loan documentation
The roles of Documentation Agent and ECA Agent are combined in most cases
Typical Buyer`s credit
On an example of Austrian-Russian counterparties
lender
ECA
do
cu
ments
dis
bu
rsem
ent
funding
borrower export
contract exporter
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Investments (% of GDP) Role of Investments in CEE
(% on Total)
Development of Investments
Source: Eurostat
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
2005 2007 2009 2011 2013
Western Europe
Central EasternEurope
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ECA Financing opportunities
UniCredit in Central Eastern Europe offering
ECA-covered Financing
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UniCredit is at home in most of Central Eastern European countries
#2
Baltics*
Leasing
#9
#7
#1
#5
#4
#5
#3
#4
#1
#1
#6
#3
Rep. Office in
FYR
Macedonia
and
Montenegro
Serbia
9.8% market share
71 branches
Bosnia and Herz.
22.8% market share
119 branches
Croatia
26.3% market share
135 branches
Slovenia
7.3% market share
30 branches
Hungary
6.8% market share
85 branches
Slovakia
7.1% market share
77 branches
Czech Republic
9.8% market share
107 branches
Poland
10.9% market share
1,015 branches
Russia
1.6% market share
102 branches
Ukraine
3.5% market share
250 branches
Romania
7.5% market share
184 branches
Bulgaria
19.0% market share
197 branches
Turkey
9.9% market share
1,038 branches
Azerbaijan
18 branches
Market shares and ranking: data as of 2Q 2015 in terms of total assets according to local accounting standard, unconsolidated figures (Serbia, Bosnia & Herzegovina, Hungary, Czech Republic, Ukraine, Bulgaria, Turkey, Russia), local accounting standard, consolidated figures (Croatia), IFRS (Slovenia, Slovakia, Poland , Romania). Croatia and Hungary include mortgage bank. Branches: data as of June 30, 2015. Bosnia & Herzegovina includes UniCredit Bank Banja Luka. Azerbaijan includes Yapi Kredi branches. * Estonia, Latvia, Lithuania Source: UniCredit
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UniCredit`s footprint within the ECA community
Under consideration: Cesce (Spain), UKEF (United Kingdom)
(SACE)
Belgium
Denmark
(EKF)
Switzerland
(SERV)
United States
(EXIMBANK)
Germany
(EULER HERMES)
Finland
(FINNVERA)
France
(COFACE)
Netherlands
(Atradius)
Czech Republic
(EGAP)
Hungary
(EXIM)
Austria
(OEKB)
Sweden
(EKN)
Korea
(K-Sure / Eximbank)
Slovenia
(SID Banka)
(Delcredere / Ducroire)
Italy
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UniCredit Home Markets
Singapore
Hong Kong
New York
Paris
Moscow
Munich
Vienna
Prague
Milan
Istanbul
Bucharest
UniCredit STEF teams
UniCredit`s strategic positioning to cover transactions worldwide
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UniCredit’s response to key challenges of the Project :
1. No completion guarantee – Instead a single robust turnkey lump-sum EPC contract plus a contingent equity facility
2. The largest and most diverse group of ECAs (Cesce, K-Sure, Nexi, Sace, US Ex-Im and JBIC) for any multi-sourced financing in Turkey to-date
required careful structuring of the EPC tender, contract and sourcing from the relevant countries. It also included sizable uncovered funds from local
and international banks.
3. Financing was successfully closed in a tough banking environment with limited liquidity.
SOCAR Turkey Aegean Refinery
USD 3,290,000,000
Project Finance
Sole Financial Adviser,
MLA, Intercreditor &
Security Agent, Hedge
Coordinator
Turkey, Jun 2014
Middle East and African Refinery
Deal of the Year 2014
Star Rafineri
European Oil and Gas Deal of the Year
2014
Star Rafineri
# 2 Best Project Finance Loan
2014
Star Rafineri
Best Turkish Deal of the Year 2014
Star Rafineri
Best Overall ECA/Project Finance Deal of the Year
2014
Star Rafineri
STAR, Multi-award Financing – UniCredit sole Financial Advisor
UniCredit track record in ECA-covered financing
Selected Transactions in Project Finance
Nord Stream Phase I & II – CEE, 2010/2011 Background
EUR 3.8 bn (Phase I) and EUR 2.5 bn (Phase II) 14.5-year Project Financing
The sponsors are Gazprom, BASF, E.ON, Gasunie, GdFSuez
UniCredit was mandated as UFK agent, advisor and MLA (Phase I & II) and Documentation Bank (Phase II)
UniCredit also acted as the Coordinator of the Repricing of Phase I in October 2011
Highlights
Nord Stream is a two-line (Phase I & II) natural gas pipeline linking Russia and Western Europe across the Baltic Sea floor.
Already operational, the project will supplies 55 bcm to customers in Western Europe. Phase I financing was raised in the
environment negatively impacted by post-Lehman liquidity crunch and the Repricing of Phase I was done in the environment
negatively impacted by Greece debt fall out. In both cases UniCredit provided invaluable assistance through advice and
coordination.
European
Gas
Deal of the Year
2009/2010
Nord Stream
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Radiotherapy Centre
Friendship Hospital
EUR 9,673,000
ECA Buyer Credit
ECA: OeKB
UC BA AG sole lender
Laos, 2014
UniCredit track record in ECA-covered financing
Selected Transactions
Construction of a Sulphuric
Acid Plant
EUR 56,300.000
SACE Covered Export
Finance Facility
Borrower: Toros Tarim
ECA: SACE
Sole Lender
Turkey, 2013
Equipment for
Natalka Mine
USD equivalent of
EUR 44,900.000
Buyer’s Credit covered
ECA: OeKB
Borrower: OJSC
Matrosova Mine
Guarantor: Polyus Gold
Sole lender
Russia, 2013
North Clinic
AVA Peter LLC
EUR 8,000.000
Buyers Credit covered
ECA: OeKB
Sole Lender
Russia, 2013
MoF Mongolia
National Centre for Maternity
and Children Health
Ulan Bataar
EUR 7,000.000
OeKB covered
Soft Loan Facility
UC BA AG sole lender
Mongolia, 2014
Hot-rolling Tube Mill
USD 310,000,000
Euler Hermes covered
Buyer's Credit
MLA, ECA &
Facility Agent
USA, 2013
TREVI
EUR 40,000,000
(of which EUR 20 mn
SACE guaranteed)
MT Facility,
MLA, Bookrunner,
Lender, Agent
Italy, 2014
Equipment for
Balabanli Wind Farm
EUR 47,500,000
Buyer’s Credit under
ECA insurance (EKF)
MLA, Lender,
EKF Agent
Turkey, 2014
Construction of a
HRPC
EUR 420,000,000
ECA cov. Buyer’s Credit
MLA, Original Lender,
SACE Agent
Russia, 2013
EUR 325,000.000
SACE Covered Facility
ECA: SACE
Mandated Lead Arranger
Bermuda, 2013
Alstom
Metro de los Teques
EUR 93,000,000
ECA-covered Buyer
Credit
Lender
ECA: COFACE
Bolivarian Republic of
Venezuela, 2013
Mining Equipment
EUR 171,000.000
ECA Buyer Credit
Borrower: RRCo
ECA: Euler Hermes
MLA, EH Agent
Russia, 2013
Equipment for
pulp&paper industry
EUR 7,800.000
ECA Buyer Credit
Borrower: APPM, Russia
ECA: EKN
Sole Lender
Russia, 2013
Equipment for
pulp&paper industry
EUR 14,100.000
ECA Buyer Credit
Borrower: APPM
ECA: Finnvera
Sole Lender
Russia, 2013
Equipment for
pulp&paper industry
EUR 20,600.000
ECA Buyer Credit
Borrower: APPM, Russia
ECA: OeKB
Sole Lender
Russia, 2012
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Thank you
Paolo Spada
CEE Corporate & Investment
Banking
UniCredit Bank Austria AG
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