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

3

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

5

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

Paolo.spada@unicreditgroup.at

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