Developing Opportunities with Korea Eximbank (KEXIM)Strengthen the bank’s role as the leading bank...
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October 8, 2013 Developing Opportunities with Korea Eximbank (KEXIM) June, 2011
Transcript of Developing Opportunities with Korea Eximbank (KEXIM)Strengthen the bank’s role as the leading bank...
October 8, 2013
Developing Opportunities with
Korea Eximbank (KEXIM)
June, 2011
Table of Contents
SECTION 1 KEXIM at a Glance 3 SECTION 2 Finance Solutions 12 SECTION 3 Infrastructure Finance 21 SECTION 4 Recent KEXIM Supported Case 31
SECTION 1
KEXIM at a Glance
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Established in 1976 pursuant to the special act
- the Export-Import Bank of Korea Act
Often functioning as government vehicle to remedy
market failure
An Export Credit Agency
mandated by Korean Government
to promote
export competitiveness of
Korean goods and services
Specially Mandated Institution
The Government fully owns KEXIM’s capital directly and
indirectly through other governmental arms
KEXIM’s Chairman & President is appointed by the
President of Korea
Board of Directors and Auditor are appointed by the
Government
100% owned by Government
Par with Sovereign Ratings
100% Ownership
Aa3 (Stable) A+ (Stable) AA- (Stable)
Republic of Korea
KEXIM at a Glance Key Profile
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KEXIM at a Glance
KEXIM is taking a robust role in the global export credit market alongside other leading ECAs.
Germany
Japan
France
USA
UK
Italy
Export-Import Bank of
the United States
KEXIM as an ECA
Korea
The Export-
Import Bank of
Korea
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KEXIM at a Glance Objectives
Arrange the best financing package to implement deals
Assist sponsors / investors achieve optimal financing terms under
a bankable financing structure
Strengthen the bank’s role as the leading bank for global business
providing a variety of financing tools
Collaborate with Multilateral Development Banks and ECAs to
promote co-financing in emerging countries
Primary
Objective of
KEXIM
Support Korean Exporters / Investors
Conducting Overseas Business
Enhance Cooperative Ties with
International Institutions
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Government-entrusted Funds KEXIM’s own Account
Financial Guarantee
Project Related Guarantee
LOANS
Total Loans: KRW49tn(=U$44bn) (as of Dec 31, 2012)
Total Guarantees: KRW21tn(=U$19bn) (as of Dec 31, 2012)
Since 1987
Promote economic cooperation
between Korea and developing
countries
Total Loans: KRW3.8tn
Since 1991
Promote exchanges and
cooperation between the North
and South Korea
Total Loans: KRW2.9tn
On behalf of Korean Government, KEXIM
administrates EDCF and IKCF, both of which are
SEPARATED ACCOUNTS FROM KEXIM Export Credit
Import Credit
Overseas Business Credit
Economic Development Cooperation Fund
(“EDCF”)
Inter-Korean Cooperation Fund (“IKCF”)
Key Operation
GUARANTEES
7
KEXIM at a Glance
Economic Development Cooperation Fund
(“EDCF”)
Inter-Korean Cooperation Fund (“IKCF”)
Economic Development Cooperation Fund
(“EDCF”)
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•‘76.07 Established, Authorized Capital : KRW150 bn
•‘87.06 Initiated Operate of EDCF
•‘87.12 Increased Authorized Capital to KRW1 tn
•‘91.03 Initiated Operate of IKCF
•‘97.12 Annual Disbursement Exceeded KRW10 tn
•‘98.09 Increased Authorized Capital to KRW4 tn
•‘03.12 Annual Support Exceeded KRW20 tn
•‘09.01 Increased Capital to KRW8 tn
•‘10.11 Annual Support Exceeded KRW60 tn
•‘12.12 Annual Support Exceeded KRW70 tn
KRW74 tn
(≒ USD 70 bn)
KEXIM at a Glance Financial Support Trend
Actively Supported the
Export of Heavy
Chemical Industry
(1976 ~ 1990 )
Positioned as the
Specialized Financial
Institution for
International Transaction
(1991 ~ 2002)
Expanded Efforts as the
Core Bank for International
Economic Cooperation
(2003 ~ Present )
‘11 ‘13
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Since 1999, KEXIM has actively participated in global project finance market
Total 17,632
By Number of Projects
3,319 Petrochemical
235 Sewage Treatment
992 Infrastructure
3,296 Refinery
4,475 Natural Resources Development
5,315 Power & Water
By Commitment (USD in million) as of ’13. 1
Power & Water 20
Petrochemical 8
Refinery 7
Natural Resources
Development 6
Sewage Treatment 1
Infrastructure 5
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KEXIM at a Glance Project Finance Experience
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Egypt
Refinery
Expansion
(Egypt)
U$ 800 Million
Sponsored by
Citadel Capital,
EGPC, Hudson
Saudi
Jubail
Refinery Plant
(Saudi Arabia)
U$ 545 Million
Sponsored by
Saudi Aramco, Total
Yemen
LNG
Project
(Yemen)
U$ 400 Million
Sponsored by
Kogas, Total,
Yemen Gas Company
Ma’aden
Fertilizer
Project
(Saudi Arabia)
U$ 400 Million
Sponsored by
Ma’aden, SABIC
Al Qatrana
Gas-fired Power
Plant
(Jordan)
U$ 225 Million
Sponsored by
KEPCO, Xenel
Year 2008 ~ 09 Year2010
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Track Records
Surgil Gas
Project
(Uzbekistan)
U$ 1 Billion
Sponsored by
KOGAS, Lotte
Chemical, STX
Energy, UNG
Year 2012
Ichthys LNG
Project
(Australia)
U$ 1.5 Billion
Turkey Eurasia
Project
(Turkey)
U$ 280Million
Sponsored by
SK E&C, YAPI
Merkezi
Shuweihat III
Gas-fired Power
Plant
(UAE)
U$ 400 Million
Sponsored by
KEPCO, ADEWA,
Sumitomo
Year 2011
Jurong
Aromatics
Project
(Singapore)
U$ 618 Million
Sponsored by
SK Energy,
Glencore, EDB
Barzan Gas
Project
(Qatar)
U$ 1 Billion
Sponsored by
Hyundai Heavy Industries,
JGC
Sponsored by INPEX, TOTAL
KEXIM at a Glance
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Global Multilateral of the Year and Deals of the Year
2012 Global Multilateral of the Year : Korea Eximbank
• Surgil Gas Project
• Ichthys LNG Project
• Turkey Eurasia Project
• Egypt ERC Project
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Track Records KEXIM at a Glance
(2008) (2009) (2010) (2012)
SECTION 2
Finance Solutions
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Financing Program
Project
Finance
Interbank
Credit
Export Credit(Loan/Guarantee)
Interbank Export Loan
Project Related Guarantee (Bonds)
Finance
Solutions
Korean
Exporter
EDCF
Performance Bond Guarantee
Pre-Shipment Credit
Official Development Aid(Loan)
Finance Solutions
Overseas Business Credit(״)
Untied Two-Step Loan
Standby LC for Equity Injection
(Overseas Investment)
Political Risk Guarantee
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Borrower
Interest Rate
Premium
Repayment
Requirements
: Project Company*
: Libor based floating rate or
CIRR-based fixed rate
: Risk Premium subject to OECD
arrangements on Export Credit
: Up to 14 years** (Project Finance)
: Korean Contents shall be at least
25% of export contract value
Export Contract
Financial Guarantee
Loan
KEXIM
Commercial Banks
Project Company
Korean EPC Contractor
PROJECT FINANCE : EXPORT CREDIT
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Export Credit Finance Solutions
Direct Loan
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Borrower
Interest Rate
Premium
Repayment
Security
Requirements
: Project Company
: Libor based floating rate or
comparable fixed rate
: Risk Premium to be applied
: Up to 30 years (door to door)
: Mortgage, Insurance, Project A/C,
Assignment of borrower’s right
under project contracts, etc.
: Korean Sponsor’s share retention
- Completion: substantial portion should be maintained
- Repayment: at least 10%
Equity Injection
Loan
KEXIM
Commercial Banks
Project Company
Korean Sponsor
PROJECT FINACE : OVERSEAS INVESTMENT CREDIT
Overseas Business Credit
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Finance Solutions
Direct Loan
Financial Guarantee
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Borrower
Currency
Coverage
Interest Rate
Repayment
Security
: Korean companies planning to
invest overseas with more than 3
years of experience in the field
: A foreign currency or Korean Won
: Up to 80%
: Libor(or Swap) based floating rate
or comparable fixed rate
: Maximum 30-year repayment period
including 3-years grace period
:- Bank guarantee, pledge, mortgage
on the borrower’s local assets
- Loan on credit possible
Equity Injection
Loan
Equity
KEXIM
Korean Investor
Foreign Company
Foreign Investor
CORPORATE FINACE : OVERSEAS INVESTMENT CREDIT
Overseas Business Credit
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Finance Solutions
Re-lending
Re-lending
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Borrower
Currency
Coverage
Interest Rate
Repayment
Term
Security
: Korean companies that conduct
overseas projects without establishing
a foreign company
: A foreign currency or Korean Won
: Up to 80%
: Libor(or Swap) based floating rate or
comparable fixed rate
: Maximum 30-years repayment period
including 3-year grace period
: - Bank guarantee, pledge, mortgage
on the borrower’s local assets
- Loan on credit possible
Loan
Conduct Project
KEXIM
Korean Investor
Overseas Project
Foreign Investor
CORPORATE FINACE : OVERSEAS PROJECT CREDIT
Overseas Business Credit
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Finance Solutions
Conduct
Project
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Borrower
Currency
Coverage
Interest Rate
Repayment
Term
Security
: Foreign companies in which a
Korean company has an equity
share
: Basically a foreign currency
: Up to 100%
: Libor(or Swap) based floating rate or
comparable fixed rate
: Maximum 30-year repayment period
including 3-years grace period
- Loan on credit possible to creditworthy
borrowers
Equity
KEXIM
Korean Investor
CORPORATE FINACE : OVERSEAS BUSINESS CREDIT
Overseas Business Credit
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Finance Solutions
Direct Loan
Foreign Company
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Trade Deals
Loan
Sub-Loan
KEXIM
Foreign Bank
Foreign Importer
Korean Exporter
INTERBANK EXPORT LOANS
Interbank Export Loans
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Finance Solutions C
red
it L
ine
Classification Short-Term Long-Term
Eligible
Transactions Commodities, Services
Financing Tenor Less than
2 years 2-10 years
Max. Financing
Amount
100% of contract
amount
85% of contract
amount
Interest Rate
(Floating) Libor +
spread
(Fixed) SWAP +
spread
(Floating) Libor +
spread
(Fixed) CIRR +
exposure fee
Repayment
Lump-sum or Equal
semi-annual
installments
Equal semi-annual
installments
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KEXIM provides repayment protection (Financial Guarantee) for participants in the
ECA covered commercial bank’s loan
KEXIM covers 100% of political and commercial risk Comprehensive risk coverage during entire project life Comprehensive
Risk Coverage
Unconditional
Guarantee
Cover all of the
principal and interest
Guarantee
Conditionality
Paid upon Request
Unconditional
Immediately
Coverage Ratio 100%
Insurance
Conditional (claim investigation preceded)
Within 2 months
90 ~ 100%
Local currency guarantee program Introduced SAR Guarantee Program in the Saudi Jubail Refinery project
to invite highly liquid local banks
Financial Guarantee
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Financial Guarantee Finance Solutions
SECTION 3
Infrastructure Finance
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I. 개도국 시장의 환경변화 및 도전과제
Source: MDB Working Group on Infrastructure
Demand for Infrastructure Project
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Infrastructure Demand Infrastructure Finance
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I. 개도국 시장의 환경변화 및 도전과제
Private investment commitments to PPP projects in
developing countries by continent
Source: World Bank and PPIAF, PPI Project Database
Sub Sahara East Asia MENA S. America CIS APEC
23
Infrastructure Demand Infrastructure Finance
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I. 개도국 시장의 환경변화 및 도전과제
Source: MDB Working Group on Infrastructure
Demand for Infrastructure Project
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Infrastructure Demand Infrastructure Finance
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Private investment commitments to PPP projects in developing countries,
by sector of activity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1990 1995 2000 2005 2009
Telecom Energy Transport Water and sewerage
2009 US$ billions*
Source: World Bank and PPIAF, PPI Project Database
25
Infrastructure Demand Infrastructure Finance
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Project Finance Structure
What is Project Finance?
Source: World Bank and PPIAF, PPI Project Database
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Infrastructure Finance
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Project Finance Structure
What is Project Finance?
“Project Finance involves a corporate sponsor investing in and owning a single
purpose, industrial asset through a legally independent entity financed with
non-recourse debt.”
“Raising of funds to finance an economically separable capital investment project in
which the providers of funds look primarily to cash flow from the project to service their
debt and provide returns on their equity”
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Infrastructure Finance
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Risk Management
Principle of Risk Management
Allocate project-specific risks to parties best able to bear them
Control performance risks through incentive contracts
Use market-hedging instruments (derivatives) for covering market-wide
risks (interest and exchange rate fluctuations)
Political Risk Institutional Risk
Regulatory Risk Contractual Risk
Technological Risk Construction Risk
Macroeconomic Risk Operational Risk
Environmental Risk Demand Risk
Other Risks
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Infrastructure Finance
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Principle of Risk Management
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Risk Management Infrastructure Finance
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Bankability
Major Concerns for Lenders : Bankability
Certainty of the project cash flows for meeting debt service
requirements
Bankability of public sector obligations
Soundness and stability of the legal framework for PPP
Effectiveness and enforceability of the PPP contract and related
agreements
Confidence in the regulatory regime when applicable
Right to step in if a project fails and availability of alternative
contractors
Ability of contractors to perform and the quality of their management
Bankability of contractors and quality of contractor guarantees
Risks that are understood, controllable, finite, and appropriately
allocated
Reputation impact of the project (environmental, social)
Availability and effectiveness of insurance cover, where needed.
30
Infrastructure Finance
SECTION 4
Recent KEXIM Supported Case
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3 Bankability & Recent Cases of KEXIM-supported Projects Project Description
The project is connecting the European and Asian continent by construction of
underground tunnels in Bosphorus strait.
Turkey Eurasia Project
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Traffic growth historically has followed the same pattern as economic growth, albeit at a faster
rate.
Growth has tailed off in recent years as volumes approach capacity limits of the bridges.
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Ind
ex (
19
87
= 1
00
)
Year
AADT ALL Veh
AADT Lights
GDP (real, 1998 prices)
Project Description
Indexed Traffic and GDP Growth, 1987 to 2009 Compound Annual Growth Rates, Existing Bridges
YEAR
Bosporus
Bridge
FSM
Bridge
AADT* AADT
’73 ~ 80 16%
’80 ~ ’89 7%
‘89 ~ ’00 2% 19%
‘00 ~ ’09 0% 3%
* Annual Average Daily Traffic
Turkey Eurasia Project
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September 2009 – KEXIM issued LOI to the ATAS( previously
TKJV )
2008
2009
2010
2011
2012
2017
2013
December 2008 - Turkish Korean Joint Venture (TKJV)
awarded the BOT concession by DLH (General Directorate of Railways, Seaports and Airport Construction)
June 2010 – Lenders group started due diligence and negotiation
February 2011 – Signing of the Implementation Contract(ATAS, Gov’t)
2011 – Negotiation and documentation
June 2012 – KEXIM’s board approval
2017 – Estimated start of operational service
Project History
March 2013 – Financial Close & First drawdown
Turkey Eurasia Project
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Project Structure
Structure
Korean
Sponsor
Turkish
Sponsor
Ministry of Transportation, Maritime
and Communications Turkey Treasury
Project Company
(ATAS)
K-EXIM
K-SURE
EPC contractor (Sponsor JV) O&M contractor
Implementation Contract ICDA DAA
Finance Agt
Shareholder Agt
EPC Contract O&M Contract Commercial Bank
EIB
EBRD
Turkey Eurasia Project
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shared with you solely for Information purposes.
Korea Eximbank does not make any representation or warranty as to
the accuracy or completeness of this information.
These presentation materials may not be reproduced or disclosed to
any person or entity in whole or in part, or used for any other purposes
(except for this discussion today), without the prior written consent of
Korea Eximbank.
Disclaimer
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