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Afreximbank Workshop on Special Products Cairo, Egypt 2 December 2010 Accessing Korea Eximbank Facility.

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Presentation on theme: "Afreximbank Workshop on Special Products Cairo, Egypt 2 December 2010 Accessing Korea Eximbank Facility."— Presentation transcript:

1 Afreximbank Workshop on Special Products Cairo, Egypt 2 December 2010 Accessing Korea Eximbank Facility

2 C:\DPS NEW\Pres\PPT\PresPrint.pot Table of Contents SECTION 1 Introduction to Korea Eximbank SECTION 2 Interbank Export Credit Facility at Afreximbank SECTION 3 Recent Trends in Korea-Africa Trade SECTION 4 The Way Forward

3 SECTION 1 Introduction to Korea Eximbank

4 C:\DPS NEW\Pres\PPT\PresPrint.pot Export Credit Agency (ECA) As official Export Credit Agency (ECA), KEXIM aims to provide financial supports for Korean trade and overseas investment, and to promote international economic cooperation with developing countries. Mission (1) As of 31 December KRW/USD exchange rate = KRW 1,210.3 to USD 1.00 as of 30 June Source : Bloomberg Korea Eximbank at a Glance  Established in 1976 pursuant to the Export-Import Bank of Korea Act  100% Owned by the Government  Total Asset : KRW45.6trn (equiv. to U$37.7bn) (1)  Total Paid-in Capital : KRW5.2trn (equiv. to U$4.3bn) (1)  Total Equity : KRW6.6trn (equiv. to U$5.5bn) (1) Profile

5 C:\DPS NEW\Pres\PPT\PresPrint.pot Business Areas with Policy Mandates Export Credits 1 Overseas Investment Credits 2 Import Credits 3 Guarantee facilities 4  Provision of loans to facilitate Korean exports.  Loans to finance Korean overseas investments and projects.  Extension of loans to finance Korean imports of essential materials and natural resources.  Support the obligations of Korea’s overseas business. Administration of Government Funds Economic Development Cooperation Fund (“EDCF”) Inter-Korean Cooperation Fund (“IKCF”)

6 C:\DPS NEW\Pres\PPT\PresPrint.pot Financing Overview ▶ Long term export - Pre-shipment - Deferred payment ▪ Direct Loan (PF, SF) ▪ Inter-bank Loan ▪ Untied Two-Step Loan ▶ Short term export - Export Loan - SME export loan - Special export loan for SMEs ▪ Investment Loan ▪ Business Loan ▪ Project Loan ▪ Natural Resources Development Loan ▪ M&A Financing, Arranger Financial ▪ Financial Project-related ▪ Project-related - Bid - A/P - Performance - Warranty etc ▪ Rediscount ▪ Factoring ▪ Fortfaiting ▪ L/C related ▪ Natural Resources, Industrial Facilities Export Trade Finance Import Guarantee Overseas Inv’t  Bond  Equity Domestic Foreign

7 C:\DPS NEW\Pres\PPT\PresPrint.pot Long-term Export Financing 3. Shipment Supply Credit (Domestic entities) Buyer Credit (Foreign entities) * Deferred payment 1. Export Contract 2. Loan 5. Repayment* 4. Payment KEXIM 2. Loan 4. Repayment 3. Payment 1. Export Contract KEXIM Supplier (Exporter) Supplier (Exporter) Supplier (Exporter ) Supplier (Exporter ) Buyer (Importer) Buyer (Importer) Buyer (Importer) Buyer (Importer)

8 C:\DPS NEW\Pres\PPT\PresPrint.pot Long-term Export Financing (Re-lending) Inter-bank Loan Supply Contract Untied Two-Step Loan 1.Credit Line 4. Repayment 2. Sub-loan 3. Sub-loan 3. Loan 1. Credit Line 4. Remit 2. Shipment 5. Repayment KEXIM Foreign Bank KEXIM Importer Ex porter Korean Subsidiary Korean Subsidiary Local Buyer

9 C:\DPS NEW\Pres\PPT\PresPrint.pot Overseas Investment Financing Foreign Company Foreign Company Korean Company Korean Company Loan - Cap. Injection - Loan KEXIM Korean Co’s Subsidiaries Korean Co’s Subsidiaries Loan KEXIM Investment Loan Business Loan ※ Overseas Investment Credit (OIC) - Provides loans to Korean companies engaged in business outside Korea

10 C:\DPS NEW\Pres\PPT\PresPrint.pot EDCF (Economic Development Cooperation Fund) Special Support for EDCF loans Grant for Feasibility Studies, etc. Technical Assistance via Trust Funds Capacity Building Programs by EDCF EDCF Annual Workshop Identification Preparation Gov’t Approval Gov’t Approval Gov’t Agreement / Arrangement Gov’t Agreement / Arrangement Loan Agreement Loan Agreement Post Evaluation Post Evaluation Appraisal Implementation Types of Loans Development project loan Two-Step loan Equipment / commodity / compact loan Project preparation loan Co-financing with MLAs and bilateral DFIs Tied or untied facility Grants : Technical Assistance

11 C:\DPS NEW\Pres\PPT\PresPrint.pot KEXIM’s Financial Support on Africa – Disbursements In 2010, KEXIM supported 31 countries, amounting total of U$1,348 Mn 3.1% out of KEXIM’s total disbursement Scaling up Plan : Doubling financial support on Africa by 2012 (compared to 2009) (U$ Mn)

12 C:\DPS NEW\Pres\PPT\PresPrint.pot Major Projects Supported CountryProject Amount (U$Mn) Funding Source Year (Approved) Angola Construction of Industrial Advanced Technology Center 34.8EDCF(ODA)2010 Cameroon Establishment of Advanced Vocational Training Center 35EDCF(ODA)2008 KenyaTechnology Development Center Extension10.7EDCF(ODA)2007 MadagascarAmbatovy Nickel Mining Development1,251 Project Finance & OIC 2007~2010 MozambiqueConstruction of Photovoltaic Power Plants35EDCF(ODA)2010 NigerTeguidda Uranium Mining Development15 Overseas Inv’t Credit (OIC) 2010 SenegalGovernment ICT Infrastructure25EDCF(ODA)2007 Tanzania Construction of Muhimbili University of Health and Allied Sciences Medical Center 49.5EDCF(ODA)2009

13 SECTION 2 Interbank Export Credit Facility at Afreximbank

14 C:\DPS NEW\Pres\PPT\PresPrint.pot What is Interbank Export Credit? A trade finance package through which KEXIM provides Credit Lines to foreign banks to help foreign buyers obtain credit for the purchase of Korean goods and services. Global Operation : 44 banks in 22 countries AFRICA Afreximbank Nigeria South Africa SOUTH AMERICA CABEI CAF Brazil Chile Colombia Guatemala Panama Peru Dominican Republic Mexico MIDDLE EAST Iran Turkey CIS ∙ EUROPE Russia Kazakhstan Uzbekistan Ukraine Azerbaijan ASIA India Philippines Vietnam Indonesia Mongolia

15 C:\DPS NEW\Pres\PPT\PresPrint.pot Interbank Export Credit Agreement with Afreximbank Credit Line Amount : U$50 Million Eligible Transactions : - Purchase of Korean goods and services by African Importers Eligible Countries : - Member Countries of Afrexim Loan Tenor : 2 ~ 5 years Pricing : Fixed Pricing (CIRR + Exposure Fee) Maximum Financing Ratio : - 85% of Contract Amount Repayment : - Semi-annual installments 2010 KOAFEC Ministerial Conference September 15 th, 2010 Seoul, Korea Main Contents

16 C:\DPS NEW\Pres\PPT\PresPrint.pot KEXIMKEXIMAfreximAfrexim African Importer Korean Exporter ① Loan ② Sub-Loan Flow of Loans – Standard Credit Line (U$50 Million) Sales Contract Trade Transaction

17 C:\DPS NEW\Pres\PPT\PresPrint.pot KEXIMKEXIMAfreximAfrexim African Importer Korean Exporter ① Loan ② Sub-Loan Local Bank Flow of Loans – Relending through Local Bank Credit Line (U$50 Million) Sales Contract Trade Transaction ③ Sub-Loan  Local Bank must : - be a Member Country of Afrexim - obtain prior approval from Afrexim, with the consent of KEXIM

18 C:\DPS NEW\Pres\PPT\PresPrint.pot Benefits Can acquire funding at an internationally competitive rate Can expand business operations with corporate clients Afrexim / Local Banks Afrexim / Local Banks AfricanImportersAfricanImporters Can secure low-cost financing with suitable tenor and flexible repayment schedules KoreanExportersKoreanExporters Can secure receipt of payment without any credit risk on the importer or the importer’s country

19 C:\DPS NEW\Pres\PPT\PresPrint.pot Identify eligible transactions. How to Utilize KEXIM Credit Line 1 Discuss terms and conditions of the individual loan with KEXIM (through Afrexim). Pricing / tenor / repayment schedule will be negotiated at this stage. 2 Upon consensus on terms and conditions, submit loan application to KEXIM (through Afrexim). 3

20 C:\DPS NEW\Pres\PPT\PresPrint.pot Disbursement : L/C Procedure L/C Procedure 1 KEXIMKEXIMAfreximAfrexim African Importer Korean Exporter ① Loan Application/Approval ② L/C Issue ④ Loan ③ Negotiation & Payment ⑤ -2 Loan Shipment Local Bank ⑤ -1 Loan Credit Line (U$50 Million) ※ In case Local Bank opens L/C, -Local Bank must obtain prior authorization from Afrexim, with the consent of KEXIM -It should be noted in the L/C that it is opened pursuant to Master Interbank Export Credit Agreement between KEXIM and Afrexim

21 C:\DPS NEW\Pres\PPT\PresPrint.pot Disbursement : Reimbursement Procedure Reimbursement Procedure 2 K-EXIMK-EXIMAfreximAfrexim Korean Exporter ① Loan Application/Approval ③ Disbursement Request ④ Reimbursement African Importer Shipment Local Bank ② -1 Payment ⑤ Loan ② -2 Payment Credit Line (U$50 Million) ※ In case Local Bank makes payment, -Local Bank must obtain prior authorization from Afrexim, with the consent of KEXIM -It should be noted in the Sub-loan agreement (between Afrexim and Local Bank) that the loan is made pursuant to Master Interbank Export Credit Agreement between KEXIM and Afrexim

22 SECTION 3 Recent Trends in Korea – Africa Trade

23 C:\DPS NEW\Pres\PPT\PresPrint.pot Korea-Africa Trade Volume (U$ Bn) Export Import Steady growth in Export (Korea → Africa) : ’04-’09 CAGR 8.5% By Sector : Ship, Automobiles, Plastics amount 73% By Product : Growing Demand in Automobiles, IT & Telecommunications, Green Energy & Natural Resources Development

24 C:\DPS NEW\Pres\PPT\PresPrint.pot Major Korean Exporters ShipShip AutomobilesAutomobiles Electronics / Telecom Telecom Chemical / Plastics Plastics Auto Parts / Components

25 SECTION 4 The Way Forward

26 C:\DPS NEW\Pres\PPT\PresPrint.pot In line with financing demands, KEXIM will increase the amount of Credit Line at Afreximbank. KEXIM will continue its financial support for Africa, as Korea-Africa trade transactions continue to expand. KEXIM is open for any recommendations and suggestions for improvement. KEXIM’s Policy Credit Line System Improving Continuous Support KEXIM is interested in utilizing Afrexim credit line in supporting accompanying transactions related to mega projects & ODA projects that KEXIM finances.

27 C:\DPS NEW\Pres\PPT\PresPrint.pot Contact Kwanghyun Byun Interbank Export Finance Department Korea Eximbank Thank you for your kind attention!


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