Getting Ukraine to become Fluent in EXIM.

How can US Exporters increase their exports to Ukraine and what do the latest developments mean for US EXIM programs there?

  Since the original Fluent In EXIM post was published on February 11th, several important events took place, which potentially may have an effect on how exports to Ukraine are financed by the Export Import Bank of the United States (US EXIM).

• New President of Ukraine was inaugurated a few days ago, potentially putting the country on a different political course.
• New, closer, date has been set for the elections of People’s Deputies into Ukrainian Rada
• US Congress confirmed three new Board members thus opening the  way for US EXIM to finance  projects over $10 million with a duration of financing  longer than seven years

Although not on the same level of importance as the above events, in March, in partnership with the US Ukraine Business Council (USUBC), our Firm held a financing workshop in Washington DC to help participants learn about available government financing programs, with the US EXIM  representative and its authorized broker prominently prominently featured on the agenda.  We have also received numerous EXIM financing inquiries from Ukraine, particularly in the areas of agriculture, renewable energy, transportation and healthcare. A second workshop for USUBC members and invited guests will take  place in Lviv later this month.

In this post, we will examine what, if any, effect these changes shall have on the US EXIM’s programs currently in place for that country. We will  also look at the ways Ukrainian importers and US exporters can best take advantage of these programs.

Currently, US EXIM is only open in Ukraine for short (financing of trade up to one year) and medium-term (financing of $10 million per project up  to seven years)  programs. Thus reopening the US EXIM for the long-term programs will not have any effect on Ukrainian export transactions.

Election of  the new President and upcoming Rada elections also are  not expected to  affect the US EXIM programs for the foreseeable future.

Yet despite the absence of the long-term programs, US EXIM bank remains an effective tool for US exporters wishing to export goods and services to Ukraine. Under its short-term program, the Bank will insure against buyer non-payment and political risks up to 95 percent of the foreign receivables’ invoice value, thus allowing exporters to safely extend open account terms to foreign buyers (both private and  government) for periods up to one year, with 90-day, 120-day terms being most prevalent.  This is done by putting in place either a Single Buyer, or Multi-Buyer credit insurance by the exporter and then qualifying and insuring individual importers under these policies. Depending on the policy limits sought, EXIM employs different underwriting standards and requires increasingly deeper credit checks and financial documentation.

Most qualified US exports, other than sales to of alcohol, tobacco and adult content, as well as sales to foreign military, may be insured; even equipment and services related to nuclear industry.  In Ukraine, larger private transactions will require a repayment guarantee from one  of the  five or so top banks and on the government side a sovereign guarantee is needed. Since it is almost impossible to obtain a UA government’s guarantee for smaller transaction amounts, the US exporters should focus selling their wares to the private sector.   The credit insurance may be obtained either from the Bank directly, or at no additional cost, through a cadre of US EXIM approved insurance brokers whose list is found on the exim.gov site.

Under its medium term programs, US EXIM can cover up to 85 percent of qualified US exports, including eligible freight and duty costs. As mentioned above, financing limit is $10 million per distinct transaction, and repayment terms of up to seven years apply.  For projects, which require local construction or installation (ex solar farms, grain silos), up to 30 percent of the financed amount maybe used to cover local costs performed by Ukrainian companies.

Depending on the project, repayment of the financing may be structured as interest only for up to two  years, with the balance of principal and interest paid out evenly over the remainder of the loan term.  Services such as engineering, architecture, design, legal and financial, all may be financed under this program.

Although US EXIM can lend funds directly at what is commonly known as a CIRR  rate, more often it  issues a its AAA rated guarantee and the exporters then approach an approved bank to secure financing rates, which are  usually more advantageous, as they are based on LIBOR and can either be variable, or fixed depending on the borrower’s preference.  Underwriting requirements of bank guarantee  for the private transactions, or sovereign guarantee for government purchases also apply. Many borrowers choose to finance the remaining 15% percent through those same  local banks  thus effectively securing 100% financing for their projects.

Since the process of securing financing and insurance coverage  through any government agency, or an international financial institution is quite complex, we always recommend  that clients engage a qualified and experienced financial adviser and a very competent law firm with extensive experience working with the US EXIM Bank.

To get more information on the upcoming Fluent In EXIM workshop in Ukraine, please  contact MorganWilliams at mwilliams@usubc.org

 

 

 

 

 

 

 

 

 

World Affairs Councils of America Welcomes Broad Street Capital Group as National Affiliate Member and Sponsor

Washington, DC, May 14, 2019 — The World Affairs Councils of America (WACA) is pleased to announce that Broad Street Capital Group (www.broadstreetcap.com) has joined WACA as a National Affiliate Member, sponsor of the WACA National Conference, and member of its prestigious 1918 Society.

Broad Street’s expertise in advising on foreign direct investment (FDI) strategies in emerging and frontier market countries and WACA’s ability to convene foreign government leaders and influential audiences through its extensive network of more than 90 World Affairs Councils across the United States will provide a powerful platform for U.S. companies targeting investment opportunities and seeking policy and regulatory knowledge in these markets.

Broad Street will tap the WACA platform to conduct a national tour to educate potential U.S. investors on available U.S. Government financing options, as well as political and trade risk mitigation tools. WACA will assist Broad Street in organizing bilateral trade missions and curated foreign policy tours to highlight economic advantages of the target markets and to facilitate trade and investment opportunities.

“It is an honor and a privilege to become WACA’s newest National Member,” said Alexander Gordin, co-founder and Managing Director of the Broad Street Capital Group.  “My colleagues and I look forward to helping this prestigious 100-year old national organization to grow into the next century of its existence.  Foreign direct investment is an essential  part of sound foreign policy for any nation and having such an esteemed partnership with the WACA network’s convening power on this issue, would definitely bring significant measurable results.”

“WACA is delighted to collaborate with Broad Street and we look forward to inviting leading investors and representatives of foreign investment agencies as guests of the Broad Street Capital Group at WACA’s 2019 National Conference in Washington, DC,” said Bill Clifford, President and CEO of the World Affairs Councils of America.

Scheduled for November 6-8 at the Mayflower Hotel in DC, the WACA Conference will feature more than 50 leaders and policy experts on the theme: “The 8 Forces Reshaping the Global Economy.”

About the Broad Street Capital Group

Based in the heart of New York City’s Financial District, Broad Street Capital Group (www.broadstreetcapital.com) is an international private merchant bank, which since 1988 has served several foreign governments, multiple state-owned companies, as well as SMEs in emerging markets. Through its member companies, the Group focuses on developing project financing in the $100 million to $1 billion range, providing political risk mitigation, export management services and cross-border market development advisory. The Firm maintains a permanent presence in London, Budapest, Kyiv, Tashkent, and  Astana, .  Since its founding, Broad Street Capital Group has done business in over 35 countries, spanning the emerging markets landscape from Bangladesh to Ukraine.

The Firm works closely with all trade and development agencies of the U.S. Government and Export Credit Agencies of several European and North American countries. Since its inception, Broad Street Capital Group has been involved in multiple high-profile cross-border transactions in IT/telecom, aerospace, health care, energy generation, food security, nuclear safety, hospitality and franchising sectors. The firm’s current advisory and export management portfolio exceeds $900 million.

About the World Affairs Councils of America

The World Affairs Councils of America (www.worldaffairscouncils.org) is an independent, nonpartisan organization dedicated to engaging the public and leading global voices to better understand the world, America’s international role, and the policy choices that impact our daily lives and our future. WACA carries out its mission by:

• Supporting more than 90 World Affairs Councils across the United States and promoting programs and educational initiatives for diverse local audiences – from classrooms to C-suites, from town-hall style community forums to conferences in the nation’s capital.
• Developing Councils’ convening power nationwide by providing face-to-face connections and dialogue with global leaders, business executives, policy and trade experts, ​social innovators, and distinguished opinion makers.
• Partnering with organizations that seek to reach out to “grassroots” and “grasstops” citizens, disseminate research, mutually expand networks and transform how people, enterprises, and governments think about the world.
• Challenging the next generation to develop leadership skills and global acumen so that our communities can better compete, collaborate, and make informed decisions.

 

Senate vote restores full financing capabilities of the US EXIM Bank

(story by CC Solutions) The U.S. Senate confirms three EXIM board members, thus allowing the Bank to restore all its financing programs

Companies in Berlin, Germany; Shanghai, China; Melbourne, Australia, and Delhi, India have long enjoyed the full support of their export credit agencies, which have helped them reach new markets, grow, prosper, and increase employment in their respective countries. Today, exporters in Berlin, Connecticut; Shanghai, West Virginia; Melbourne, Florida; Delhi, New York; and thousands of other cities and towns in the United States can finally say that they have the full support of their own export credit agency. This morning the U.S. Senate voted overwhelmingly to confirm Kimberly Reed as President of EXIM, and Spencer Bachus III and Judith DelZoppo Pryor, as Members of the agency’s Board of Directors. With the confirmation of these officials, EXIM now has a board quorum, and is now able to approve financings larger than USD 10 million and longer than 7 years, something it has not been able to do since 2015. For those companies interested in learning more about long-term  US-EXIM programs please contact Broad Street Capital Group at info@broadstreetcap,com