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Afreximbank Workshop on Special Products Cairo, Egypt 2 December 2010

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

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Afreximbank Workshop on Special Products Cairo, Egypt 2 December 2010

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  1. Accessing Korea Eximbank Facility Afreximbank Workshop on Special ProductsCairo, Egypt2 December 2010

  2. 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. Korea Eximbank at a Glance Mission 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. Profile • 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) (1) As of 31 December 2009. KRW/USD exchange rate = KRW 1,210.3 to USD 1.00 as of 30 June 2010. Source : Bloomberg

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

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

  7. KEXIM KEXIM Long-term Export Financing Supply Credit (Domestic entities) Supplier (Exporter) Buyer (Importer) 1. Export Contract 2. Loan 4. Repayment 3.Payment Buyer Credit (Foreign entities) 2. Loan 4. Payment Supplier (Exporter) * Deferred payment Buyer (Importer) 5. Repayment* 1. Export Contract 3. Shipment

  8. KEXIM KEXIM Long-term Export Financing (Re-lending) Inter-bank Loan Foreign Bank 1. Credit Line 5. Repayment 3. Loan 5. Repayment 4. Remit Exporter Importer 2. Shipment Korean Subsidiary Untied Two-Step Loan 2. Sub-loan Foreign Bank 1.Credit Line Local Buyer Supply Contract 4. Repayment 3. Sub-loan

  9. Korean Company Foreign Company - Cap. Injection - Loan KEXIM KEXIM Loan Korean Co’s Subsidiaries Loan Overseas Investment Financing • ※ Overseas Investment Credit (OIC) • - Provides loans to Korean companies engaged in business outside Korea Investment Loan Business Loan

  10. Identification Post Evaluation Preparation Implementation Appraisal Gov’t Approval Loan Agreement Gov’t Agreement / Arrangement EDCF (Economic Development Cooperation Fund) Types of Loans < Loan Procedure > • 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 • Special Support for EDCF loans • Grant for Feasibility Studies, etc. • Technical Assistance via Trust Funds • Capacity Building Programs by EDCF • EDCF Annual Workshop

  11. KEXIM’s Financial Support on Africa – Disbursements • In 2010, KEXIM supported 31 countries, amounting total of U$1,348 Mn • 3.1% out of KEXIM’s total disbursement • Scaling up Plan : Doubling financial support on Africa by 2012 (compared to 2009) < Disbursements to Africa (2005~2010) > (U$ Mn)

  12. Major Projects Supported

  13. SECTION 2 Interbank Export Credit Facility at Afreximbank

  14. 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 CIS ∙ EUROPE Russia Kazakhstan Uzbekistan Ukraine Azerbaijan MIDDLE EAST Iran Turkey ASIA SOUTH AMERICA AFRICA India Philippines Vietnam Indonesia Mongolia CABEI CAF Brazil Chile Colombia Guatemala Panama Peru Dominican Republic Mexico Afreximbank Nigeria South Africa

  15. Interbank Export Credit Agreement with Afreximbank Main Contents • 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 15th, 2010 Seoul, Korea

  16. Flow of Loans – Standard Credit Line (U$50 Million) KEXIM Afrexim ①Loan ②Sub-Loan AfricanImporter KoreanExporter Trade Transaction Sales Contract

  17. Flow of Loans – Relending through Local Bank Credit Line (U$50 Million) KEXIM Afrexim ①Loan • <※ Relending Criteria> • Local Bank must : • - be a Member Country of Afrexim • - obtain prior approval from Afrexim, with the consent of KEXIM ②Sub-Loan LocalBank ③Sub-Loan AfricanImporter KoreanExporter Trade Transaction Sales Contract

  18. Benefits Afrexim / Local Banks • Can acquire funding at an internationally competitive rate • Can expand business operations with corporate clients African Importers • Can secure low-cost financing with suitable tenor and flexible repayment schedules Korean Exporters • Can secure receipt of payment without any credit risk on the importer or the importer’s country

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

  20. Disbursement : L/C Procedure 1 L/C Procedure Credit Line (U$50 Million) ①Loan Application/Approval KEXIM Afrexim • ※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 ②L/C Issue ④Loan ⑤-1Loan ⑤-2Loan LocalBank ③Negotiation & Payment AfricanImporter KoreanExporter Shipment

  21. Disbursement : Reimbursement Procedure 2 Reimbursement Procedure Credit Line (U$50 Million) ①Loan Application/Approval • ※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 K-EXIM Afrexim ③ Disbursement Request ④ Reimbursement ②-1 Payment ②-2 Payment ⑤Loan LocalBank KoreanExporter AfricanImporter Shipment

  22. SECTION 3 Recent Trends in Korea – Africa Trade

  23. Korea-Africa Trade Volume • 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 (U$ Bn) Export Import < By Sector >

  24. Major Korean Exporters Ship Automobiles Electronics / Telecom Chemical / Plastics Auto Parts / Components

  25. SECTION 4 The Way Forward

  26. KEXIM’s Policy Credit Line • In line with financing demands, KEXIM will increase the amount of Credit Line at Afreximbank. ContinuousSupport • KEXIM will continue its financial support for Africa, as Korea-Africa trade transactions continue to expand. • KEXIM is interested in utilizing Afrexim credit line in supporting accompanying transactions related to mega projects & ODA projects that KEXIM finances. SystemImproving • KEXIM is open for any recommendations and suggestions for improvement.

  27. Thank you for your kind attention! • Contact • Kwanghyun Byun • Interbank Export Finance Department • Korea Eximbank • +82-2-3779-6371 • bytal@koreaexim.go.kr • www.koreaexim.go.kr

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