FTS-DOC ITA

Moderator: Ms. Linda Abbruzzese

May 19, 2009

1:00 pm CT

Coordinator: Welcome and thank you for standing by. At this time all parties have been placed on a listen-only mode until the question and answer session. To ask a question during today’s conference please press star followed by 1 on your touch-tone phone.

Today’s conference is also being recorded. If you have any objections please disconnect at this time.

I would now like to introduce Ms. Linda Abbruzzese. Thank you. You may begin.

Linda Abbruzzese: Thank you. Good afternoon for those of you joining on the East Coast. And good morning for those of you joining on the West Coast. Thank you for joining us for a Webinar on Ex-Im Bank Webinar series, the Competitive Financing For Your Buyers.

I’m Linda Abbruzzese, International Trade Specialist for the Marketing and Communications Office for the US Commercial Service at the Department of Commerce.

This Webinar is being brought to you in cooperation by the US Commercial Service and Export-Import Bank.

This Webinar presented by Export-Import bank is the third and last of the series of five Webinars which has focused on the aspects of export financing. This Webinar will show how Ex-Im bank can assist US companies by guaranteeing financing through creditworthy international buyers both public and private sectors for the purchases of US capital goods and services.

This Webinar will talk about the guarantee for the commercial lender loans to foreign buyers which covers about 100% of principle interest against both political and commercial risk of nonpayment.

Medium term guarantees of up to seven years cover the sales of capital items such as trucks and construction equipment, scientific apparatus through processing, machinery, medical equipment, et cetera.

The main topics that will be covered in this Webinar will enable international buyers to obtain loans from lenders at competitive rates, find flexible financing options and repayment terms, so that there are no limits on transaction size so that buyers can be foreign companies, governments and agencies and demonstrate that long term financing is also available.

Exporters and importers will also learn about the Ex-Im Bank Letter of Interest to assist in negotiations for a sales transaction.

The LI indicates the bank’s willingness to consider a financing offer if the sale is completed.

In a moment I’ll turn this presentation over to Augustine Grace, Senior Business Development Officer for the Business Development for Export-Import Bank.

Also speaking will be Kyle J. Jackson of the Trade Finance and Insurance Division of the Export Finance Group and Jackie Tanenbaum, Vice President of the International Trade Finance of M&T Bank.

All speakers will be available at the end of the presentation to answer your questions. Contact information will also be provided to everyone.

Now for those of you who just joined, you can still log on to the Webinar by entering the URL Web site and passcode per instructions that were sent to you via email. And to make sure that everyone get the most benefit from this afternoon’s Webinar, please listen to the following information.

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In this Webinar we will be taking written and voice questions. We invite you to type in questions on your screen as they occur to you during the presentation. There is an icon on the top of your page towards the left with the letters Q&A which stands for questions and answers.

When you click on this icon you can click and type in your question any time during the presentation. We will compile the questions and present has many as time allows during this presentation.

Typed questions which are not answered during the Webinar due to some time constraints will receive personal answers via email from our presenters.

To ask a voice question during this Webinar please press star 1.

Now for those of you who just joined us and logged in you can still join in our Internet conference.

Now I'd like to introduce live online, Senior Business Development Officer for the business development for Export-Import Bank, Augustine Grace. Gus, thanks for joining us.

Augustine Grace: Thank you Linda. Good afternoon and thank you all for joining this Webinar entitled Medium and Long Term Financing.

As Linda mentioned, this is the final Webinar and the three-part series that Ex-Im bank has provided. This is where you'll learn about buyer finance.

We’re also fortunate to have M&T Bank and Jackie Tanenbaum here today. M&T is a frequent user of the program. And we look forward to hearing their perspective.

Ex-Im Bank has its headquarters in Washington DC. We have five regional offices and three satellite offices throughout the United States.

We work with lenders, brokers and city state partners which can be contacted in your local area. Please check our Web site www.exim.gov for the regional offices contact information.

You can also find additional information on the financing products that Kyle will be talking about this afternoon.

Now I'd like to turn the program over to Kyle Jackson at Ex-Im Bank.

Kyle Jackson: Thank you Augustine. This is Kyle Jackson. I'm a Relationship Manager with Ex-Im Bank’s Trade Finance and Insurance Group. And as both Gus and Linda indicated earlier on we will be covering buyer financing.

What we are speaking of significantly is financing that will be taken out by foreign buyers to purchase US goods and services, specifically capital goods and services.

And we’ll be talking about the medium and long term financing. And with respect to that you'll notice that Ex-Im Bank has a variety of financial products that are utilized to facilitate financing for capital goods and services.

We divide these financial products up into three primary categories -- insurance, guarantees and direct loans.

We’ll talk about each one specifically throughout the presentation. But let it be said that for an exporter all of them do the exact same thing. They provide financing for your buyers purchasing your goods and services.

The coverage available for Ex-Im Bank is political only and/or comprehensive. For the sake of this discussion it’s important to note that basically almost all transactions have comprehensive coverage associated with them.

Effectively what this means is Ex-Im Bank will honor the transaction irrespective of the reason a claim is filed.

There are some nuances to this. However what it ultimately does is protects the US exporter as well as the lender against the possibility of a default.

So let it be said that - while not getting specific about political and comprehensive, most of the time almost coverage is almost always comprehensive and more importantly that it protects you against all instances of when a e claimed would be filed.

The rules governing Ex-Im bank’s financing, this is done through our membership within the organization for economic cooperation and development.

With out going into all the specifics of what governs our financing, what you want to take away here is knowing that Ex-Im Bank is one of several export credit agencies throughout the world that belong to the OECD.

The importance of this is that it presents a “level playing field.” Effectively what we have done is we have gone into an organization and set up rules by which all export credit agencies must follow.

This means that when US exporters, you, are going out and competing for financing or excuse me, competing for business and your foreign competitor is bringing financing to the table, we will be able to match that financing and more importantly the financing on itself will be somewhat the same.

Our standard financing model is that we will finance 85% of the US goods and services.

If you look at the slide you should see standard finance model, you'll see that we have a net contract price of $1 million.

We require a 15 -- that’s one, five percent cash payment to be remitted by the foreign buyer leaving a remaining balance of $850,000.

Ex-Im Bank will finance 100% of that remaining balance as well has any additional fees and interest associated with the transaction.

So in the example on our slide you’ll see that the total financing was $875,500 okay? Now included on this slide but also covered by Ex-Im bank would also be interest.

For all transactions Ex-Im Bank charges minimally an exposure fee. The exposure fee ultimately is the fee the United States government is charging to mitigate the risk in the transaction.

What we are saying is this. In the event that the borrower is unable to pay the transaction, we are assuming all risks associated with that obligation. As such we do charge for that.

The fee itself is determined by several factors including the location of where the buyer is, the percent of coverage which will always be 100% as well as other characteristics associated with the transaction, including the amount of time it will take to draw down the transaction, the number of years they want to repay and whether or not they want to actually finance the fee.

Okay, all this is put into what we call an exposure fee calculator which is available on our Web site at www.exim.gov. And what it will generate it will be an actual exposure fee. And again, this will be the fee we will charge.

This fee is financeable. It will vary from market to market depending upon the nature of the transaction. But again, it is important to note that it is fully financeable for your foreign buyer.

Ex-Im Bank’s policies more importantly are financing covered by several different policies. These policies are in terms of form content, the amount of US content that’s included in the goods that are being provided as well as what we call local cost, military.

We will finance used and refurbished equipment. And there’s also some other minor policies known as shipping and (Tied Aid). And we’ll go through some of these policies that are very germane to this particular topic.

First and foremost is foreign content. The Export-Import Bank is A US government agency. We are for the most part taxpayer-funded. What that means is we are specifically mandate to support US goods and services, US goods and services sourced from the United States.

However, today we do realize that the possibility of having a product that has 100% US content is somewhat slim.

So we do allow for what we call eligible foreign content. Eligible foreign content would be goods that are sourced from outside the United States, brought into the United States, incorporated into a good SB manufacturer in the United States or exported on its own with other goods that are manufactured in the United States.

You will note that we typically say that the minimum eligible foreign content that a transaction or a product can have without affecting Ex-Im Bank’s financing is 15%, one, five percent.

You may recall earlier I mentioned that Ex-Im Bank requires a cash payment of 15%. Okay, the cash payment is always utilized as the offsetting mechanism for any eligible foreign content.

The next slide which is labeled example of foreign content does a very good job of illustrating this.

You will note that in case number one we have identified eligible foreign content of 25%. As such, our cash payment has been increased by 25 - to 25%. It is now $250,000 versus it typically would be $150,000.

Again, the reason for this is that the cash payment is used to offset the amount of eligible foreign content in the US goods. And so it was increased effectively.

In case Number 2 you will note that we have the same level of foreign content. The difference is we determined that the foreign content is in eligible.

What that means is these are goods and services that were manufactured or sourced outside the United States. However, they were never actually brought into the United States for export.

They were shipped directly from the source of manufacturer to the buyer. If that is done than typically Ex-Im Bank financing cannot cover those goods. Therefore, the ineligible foreign content is immediately eliminated from the financing figure.

You'll note that our net contract price is reduced by this ineligible foreign content of $250,000. And then we make our calculations based on the $750,000 instead of the $1 million.

So if you follow this slide down you’ll see that there is a substantial reduction in the availability of financing from Ex-Im Bank when you have ineligible foreign content.

Local cost financing or local cost is any goods and services that are purchased inside the buyer’s country. For example, you are a US exporter that’s building a manufacturing facility in the country overseas.

As part of your contract you required to obviously build the building and include installation of all plumbing, electricity and things of that nature.

Well the majority of goods and services that are going to be sourced into the project will be provided from the United States, certainly some of your local labor, some of your brick and mortar, some of your concrete, some of your plumbing and pipe supplies are going to be purchased in country. It is simply more economically feasible and viable to do that.

Ex-Im Bank will allow up to 30% of the US contract value to be financed additionally on top of the net contract value in local costs.

For a medium term transaction to qualify for this it must be clearly identified in the exporter’s contract that they are responsible for undertaking the local cost.

So again, using the previous example of building a manufacturing facility, your contract must clearly identify that you are responsible for the construction of that facility in the buyer’s country.

Okay, for long term financing local cost is in addition. You don't need to justify it. You simply need to request the local cost.

The next slide in our series will do a very good job of illustrating this. You will note that again we have a US export value of $1 million. We have our typical and standard cash payment of $150,000 worth of finance portion of $850,000.

However, we now have an additional finance line item of $300,000 which represents the local cost. This represents the cost the exporter would occur in country to perform the contractual obligation okay?

You will note that our total financed amount is increased by the $300,000. So therefore we were able to finance again 30% of the net contract value. This is another way that Ex-Im Bank provides US exporters a competitive tool to compete for business overseas.

Ex-Im Bank generally does not have significant prohibitions from financing goods and services. However, we are prohibited from financing defense related articles and services.

This typically means that Ex-Im Bank cannot finance tanks, guns or other items to Ministry of Defense, armies, air forces overseas.

There are however some exceptions which Ex-Im Bank can participate in, three specifically.

The first one is what we call humanitarian purposes. An example of humanitarian transaction would be the Ministry of Defense in a country is purchasing equipment for a hospital. Okay, we would be able to finance those transactions.

Another exception is drug interdiction. An example here would be like a country in Latin America that would be purchasing helicopters to patrol the border to obviously prohibit the importation of drugs to the United States.

And the last one is what we called dual use inn that items purchased by the military would have a predominant civilian application.

The great examples here are say radars. In many countries the air traffic control system is actually administered by the military. The military the military would purchase radars to manage the air traffic control system. However the predominant utilization of it would be for civilian aircraft, not military aircraft.

A large percentage of our portfolio does contain used refurbished equipment. That is equipment that was previously manufactured particularly in the United States utilized hopefully by a US company and then it’s being resold to a foreign buyer. Okay.

To qualify for Ex-Im Bank support we do require that the equipment meets certain standards.

First and foremost as I mentioned previously it must have been originally manufactured in the United States. Moreover we also ask that the equipment had been domiciled in the United States minimally one year prior to approaching Ex-Im Bank for export.

An example let’s say would be a Caterpillar tractor. Let’s say originally when it was manufactured it was purchased by a Mexican construction company.

They used the tractor for several years and then sold it back to a US construction company that also used it for let’s say one year. In that example, that Caterpillar tractor would qualify for Ex-Im Bank support.

If however, the tractor was say a foreign manufactured by let’s say a Japanese company and/or it was brought into the United States let’s say six months before approaching Ex-Im Bank, the ability for Ex-Im Bank to finance that tractor would be limited.

You’ll note from this slide that we say that we would treat the tractor as eligible foreign content.

Keep in mind that again, for eligible foreign content, our cash payment must equal the value of that product at a production basis.

So here’s an example of our Caterpillar tractor. Let’s say it costs $100. However the tractor was domiciled in Mexico, brought back to the United States. It’s going to be re-exported out.

The purchase in the United States paid $50 for that tractor okay? In that scenario our cash payment minimally must be $50. They must equal the value of that tractor at a production basis.

And again generally in the equipment that is being refurbished in the United States, Ex-Im Bank will finance all of the refurbishment cost.

Fees at Ex-Im Bank can vary depending on the type of application you are playing for. Okay, typically there are always three fees that you may pay. And again, this is very dependent upon the type of application you are applying for with Ex-Im Bank.

The first fee would be an application fee. Okay, can we have three types of applications you can apply for here at Ex-Im Bank.

First and foremost is the Letter of Interest. Okay?

If you applied online the fee is $50. Okay? The Letter of Interest will provide US companies an indication of the eligibility of their product to be supported by Ex-Im Bank.

For instance, let’s say you have a buyer that is interested from purchasing from you. However your buyers ask you to at least provide some indication about whether or not that product or their purchase can be financed by Ex-Im Bank.

If that’s the case you can apply for a Letter of Interest upon which we will review your application and make a determination of the eligibility of financing.

We will respond to you within seven business days with an answer and what you will receive from Ex-Im Bank is just that, indication of our ability to finance your product.

You can either present this to your buyer and/or perhaps you can use it yourself to help develop the financing working with your local bank such as M&T Bank. Okay?

The next application is what we call a final commitment. You would apply for a final commitment application when you have won the export order okay, when you and your buyer had actually signed that contract or you issued a pro forma invoice and/or received a purchase order.

There is no fee for a final commitment application. There is no fee because a final commitment application must also contain additional documentation to support your application.

This would include credit report, financial statement, bank references, trade references as well as the export contract.

Because of the amount of information Ex-Im bank requires us to consider the final commitment application, we do not charge for a final commitment application, okay?

The next application is what we call a preliminary commitment.

Now with the Letter of Interest you do not necessarily have to have won the export contract. In fact in most instances you have not won the export contract.

With the final commitment application however, you must have won the export contract. Its limited commitment is similar to a Letter of Interest in that you would not have actually won the export contract.

However, it is also similar to a final commitment in that Ex-Im Bank does all the review, all that credit analysis and all the due diligence to make the determination about whether or not we will actually be able to finance the transaction.

Moreover, we will also issue a decision. We will either approve or decline the request.

If we approve the request, what Ex-Im Bank is saying is that when and if you have won the export order Ex-Im Bank will finance the transaction.

Unlike a Letter of Interest with an indication of financing, a preliminary commitment is actually Ex-Im Bank saying your transaction was approved. Once the order has been won we will finance the transaction.

It is important to note that Ex-Im Bank does not do a number of preliminary commitments. Because of the resources involved in doing a preliminary commitment, because of the fact that we are doing all that due diligence we would do in the final commitment application, we have made certain - there are only certain scenarios upon which Ex-Im Bank will actually be able to issue a preliminary commitment. These scenarios are as follows.

If you are a US company and you are bidding on a foreign contract and the contract says that you must have actual financing in place, not an indication of financing put actual financing in place, you can apply for a preliminary commitment.

The next scenario. You are a US company and you are competing against a foreign company that has brought actual financing. Again, not an indication of financing but they have brought actual financing to your prospective buyer. And they have said if you sign the contract with me you will get financing.

Well clearly Ex-Im Bank does not want a US exporter to be at a disadvantage. So therefore in that scenario we will again allow for a preliminary commitment application to be filed.

It is important to note however that a preliminary commitment application is not free unlike the final commitment application.

Ex-Im Bank does charge a fee. It is 1/10 of 1% of the finance portion up to $25,000 based - of the $25,000.

That fee is refundable should you win the export contract and more importantly should you lose the export contract to a foreign competitor.

But the fee must be paid for in advance when the application is submitted to Ex-Im Bank. If the fee is not paid Ex-Im Bank will not pursue the preliminary commitment. Your application would be rejected And we would advise you to file for a Letter of Interest.

The commitment fee is a fee Ex-Im Bank charges on guarantees and direct loans that have been approved by Ex-Im Bank. The commitment fee is basically Ex-Im Bank is taking taxpayer money and we have put it aside to utilize it to finance the transaction. We want to ensure that those funds are utilized. Therefore we charge a commitment fee.

A commitment fee begins to accrue 60 days after a transaction has been approved. It is important to note that most commitment fees are paid for by the foreign buyer. These are not fees incurred by US exporters. They are charged to the foreign buyer after the transaction has been approved.

The fee itself is based on the type of product that has utilized if it is a direct loan or a guarantee or what we call a credit guarantee facility.

Typically on the front end of an application when the application being negotiated, this information will be presented to the buyer and the buyer will have to agree to pay the fee if they wish for Ex-Im Bank to move forward and finance the transaction.

In some circumstances US lenders that apply on behalf of buyers will pay it for them.

What we’re now going to begin to speak about is medium-term financing itself. Everything I presented today talks about Ex-Im Bank’s medium and long term financing as a whole. We are now specifically going to talk about medium term financing. And that is financing that is utilized to finance using US goods and services.

Ex-Im Bank has again three financial products that support medium term financing, expert credit insurance, a loan guarantee and direct loan.

Medium term insurance is a conditional extension of support issued by Ex-Im Bank. Okay, this is issued typically to a US lender or a US exporter that in turn is providing credit to a foreign borrower.

It is conditional because Ex-Im Bank actually issues an insurance policy. This is very similar to a policy you may take out on your car or on your house where we state you must do certain things to ensure you have coverage.

If you fail to do those things the coverage can be denied. Your claim can be denied.

Most insurance policies are taken out by US lenders. And US lenders do this because they’re comfortable with the requirements of typically Ex-Im Bank particularly when we issue these policies.

However some exporters can should they choose take out their own insurance policy, their own medium term insurance policy and extend it to their foreign buyers.

As an exporter and/or a lender it’s always important to keep in mind that insurance again is a conditional product. Should you not follow the insurance policy, should you not adhere to the requirements as detailed in the insurance policy if and when a claim is filed, Ex-Im Bank does deserve the right to deny the claim.

This is different than what we call a medium term guarantee which is an unconditional commitment by Ex-Im Bank on a transaction.

Medium term insurance and medium term guarantees do the exact same thing. They both support the financing of capital goods and equipment of generally $10 million or less with repayment terms of anywhere from seven to five years or less all right? However a guarantee is unconditional commitment on the part of Ex-Im Bank.

We say no matter what Ex-Im Bank will pay this claim. Guarantees are only available to financial institutions. That would be banks that are lending to foreign buyers that are purchasing equipment or goods and services from US exporters okay?

The last financial product available at Ex-Im Bank is what we call a direct loan. A direct loan is just that. It is a loan made from the United States government to a foreign borrower. Typically it’s a government to government loan for that borrower to purchase against US goods and services.

Ex-Im Bank does very few medium term direct loans. We do very few medium term direct loans because the banking industry in the United States by and large is willing to do transactions with the assistance of Ex-Im Bank.

It is prohibited for Ex-Im Bank to compete with banks in the United States. Therefore if a bank such as M&T bank which we will hear from later on today, should they want to do the transaction or be able to do the transaction with the support of Ex-Im Bank then that’s the route that we would go. And therefore we utilize either a medium term insurance and/or medium term guarantee.

Repayment periods under the medium term product line are determined by that contract price. You'll note from this slide that Ex-Im Bank, anything of $80,000 or less would receive repayment term generally of two years. Up to $10 million we can do five years and in some circumstances we can do seven years.

Key features of our medium term product line are that Ex-Im Bank covers 100% of principle and interest associated with the 85% of the US contract price. The interest rate is negotiated generally between the lender and the borrower. Ex-Im Bank typically has nothing to do with the setting of the interest rate.

As I mentioned previously, most of our transactions are done with the assistance of US lenders or lenders located in the United States. As such they determine the interest rate and that again would be negotiated between the lender and the borrower.

Additional features is that Ex-Im Bank can lend in other currencies. We currently have the ability to lend in Mexican pesos, in euros and other currencies as well. Again what this provides is another competitive tool for US exporters to compete.

Some borrowers do not want to take dollar exposure. They’re more comfortable in euros or perhaps they’re more comfortable in pesos. As such, we can lend to that borrower in that currency if need be.

The primary medium term disbursement documentation, what we’re speaking about here is that documents that are necessary for Ex-Im Bank or more importantly the lender to disperse under a Ex-Im Bank supported transaction.

It’s important to note again that a lot of the transactions that Ex-Im Bank is engaged with are done with the assistance or in cooperation with the lender. So the lender is going to be the one that’s going to manage the collection of the documentation.

For a US exporter, they intent for Ex-Im Bank is to create a financial product that allows you to continue to do your normal course of business without any additional burden okay? As such, typically for a US exporter all you would need to provide a lender under an Ex-Im Bank transaction would be an invoice and a bill of lading as well as an additional document called the Exporter Certificate.

The Exporter Certificate is a document that is unique to Ex-Im Bank. And basically what it does is it identifies the US content and the foreign content in the goods. And again keep in mind that Ex-Im Bank is specifically mandated to support US goods and services. And so this is the document we used to make sure that that’s exactly what we’re doing when we provide our financing.

The additional documentation listed on this slide is specific to banks. I will not spend a tremendous amount of time on it because it really does not pertain to exporters participation insomuch that as I mentioned previously, you will not be engaged in providing this documentation.

Your bank or the bank you deal with will manage this process. You only need to concern yourself obviously with providing an invoice and a bill of lading and then signed an Export Certificate for the bank should your transaction be financed by Ex-Im Bank.

This slide speaks to the differences between medium term insurance and guarantees. The most important two points about medium -term insurance and guarantees is that again as I mentioned previously insurance is a conditional product. Your coverage is not - is unconditional insomuch that there are certain things that must be done for Ex-Im Bank to honor the claim.

Also please keep in mind that (for) insurance it is actually a cheaper product. You may recall the slide that spoke to the determination of the exposure fee.

One of the data points you would enter would be the type of product you are using. Okay? Insurance because it is a conditional product is always cheaper than guaranteed. Some foreign buyers know this and some foreign buyers may say we want to use a medium term insurance policy with Ex-Im Bank because it is cheaper for us versus going the guarantee rate.

But again, it’s important to mention that the final determination of what product will be utilized generally will be made by the financing bank and their negotiation with the foreign buyer.

We are now going to briefly talk about long term financing. Long term financing is typically utilized for large big ticket items. This is where you see Ex-Im Bank supporting large power plants overseas as well as large aircraft purchases. Okay?

We do not have an insurance policy for long term financing. Ex-Im Bank financing is only available through either a guarantee and/or a direct loan.

Again, a direct loan is a loan made directly by United States government to a foreign borrower okay? For your purposes keep in mind that this will be done with Ex-Im Banks generally serving as the administrator of the transaction working in conjunction with their financial institution to help arrange financing for the (bulk) foreign borrower.

Repayment periods under a direct loan are determined by the location of the transaction. Category 1 countries basically refer to your typical G7. This would be your Canada, your Germany, your France. Category 2 will cover all other countries throughout the world including such countries as Russia, Nigeria, Ghana, Indonesia, Vietnam and so forth.

Why would you do a guarantee versus direct loan? Just very quickly for Ex-Im Bank’s purposes if you have a large transaction why you may want to go a guarantee route, I cannot stress the importance that a bank plays in a transaction with Ex-Im Bank. Ex-Im Bank does have several policies that have to be adhered to more important. Because of the nature of our financing there are several nuances involved with Ex-Im Bank financing.

So therefore with the guarantee the participation of the bank will allow an exporter to negotiate these issues rather seamlessly. Unlike a direct loan which would not involve a bank for the most part and could make the process little bit more cumbersome both in terms of documentation as well as in terms of other requirements that may need to be met.

Who can apply for Ex-Im Bank and how to apply it? This is depending upon the type of financing you are looking for. For medium term insurance or medium term guarantees typically the lender will apply. However an exporter does have the ability to apply for medium term insurance should they so wish.

For Letters of Interest, anyone can apply for that. Preliminary commitment, the same thing. Anyone can apply for preliminary commitment. Please keep in mind there’s a fee associated with that.

And again, for final commitments which again is a guarantee it is typically the lender or the borrower. But more than not it is always the lender.

Some special programs here at Ex-Im Bank that some people may want to be aware of.

First and foremost Ex-Im Bank has what we call a sub sovereign program. This allows for Ex-Im Bank to lend money to entities that are not the central government. We can lend to certain states and cities throughout the globe. We have done this in Russia. We have also elected to do this in Brazil as well.

In addition we have what we call more flexible financing terms for medical equipment. For many medical clinics that do not have balance sheets to support their services purchases, Ex-Im Bank can effectively look at other means to determine credit worthiness.

Cofinancing, we talked a little bit about ineligible foreign content. That would be goods and services that Ex-Im Bank cannot finance into its standard or traditional financing program.

Cofinancing allows us to actually finance those goods and services by teaming up with another ECA located in the country where those goods are being sourced.

For instance, if a transaction includes Canadian content, we can team up with a Canadian expert credit agency and provide one financing package to the borrower.

Additionally Ex-Im Bank has coverage for environmental exports. This will be including anything that is environmentally beneficial. We could allow for a considerable loan repayment terms as well as the addition of automatic addition of local costs and capitalization of interest during construction.

With respect to interest it’s important to note that interest is paid on a Ex-Im Bank loan even though principle payments may not be made yet. However under environmental exports that interest can be capitalized and simply payments not made until the principle repayments begin.

If you'd like any additional information regarding any of the topics I've discussed today please feel free to contact any of the regional offices located throughout the United States. Their numbers and contact information are located on this slide. And with that I'm now going to turn the call over to Jackie Lloyd Tanenbaum of M&T Bank.

Jackie Tanenbaum: Thank you Kyle and thank you to all participants of today’s Export Finance Webinar.

I'm going to put my PowerPoint presentation on so you can follow along. Okay, I think we’re ready now. So thank you. Sorry for the delay. As commented, my name is Jackie Tanenbaum. And I worked in the International Trade Finance Division of M&T Bank. A little bit about M&T Bank.

We are the 15th largest bank in the United States with more than $66 billion in assets. We've been in business over 150 years and we have more than 700 branches in the mid Atlantic region reaching from Buffalo, New York where we’re headquartered down to Richmond, Virginia.

Despite the regional focus of our footprint we work with exporters from all over the US when we provide financing to your foreign buyers.

M&T Bank is included in the S&P 500 and the Fortune 500. And we’re traded on the New York Stock exchange under the ticker MTB. The main shareholders of M&T Bank include our employees and management who hold 22% of the company, Allied Irish Bank who holds 23% and Warren Buffet Company Berkshire Hathaway who holds 5%. And Warren Buffett’s been a shareholder since 1990.

Going into M&T’s bank with Ex-Im Bank, we are a frequent user of all of Ex-Im Banks programs. And we've been using them for more than 13 years. We have a highly experienced expert finance team. And on average the staff on our export finance team have 19 years of experience in international business.

We have two (unintelligible) on our team. I'm one of them. And so that helps bring a lot of expertise into M&T’s International Trade Finance Division when working with Ex-Im Bank under all of their programs.

And finally M&T Bank has considerable export letter of credit expertise. We’re the 15th most active bank in the US in terms of letters of credit processed annually.

Now moving onto Ex-Im Bank’s medium term financing for your foreign buyers, under this program with Ex-Im Bank M&T bank can provide financing to your buyers for the purchases of equipment and capital goods, services and other fixed assets produced in the United States.

The benefits of this financing include coverage for up to 85% of the invoice value. We can give financing terms of typically five to seven years and up to 15 years for certain environmentally beneficial transactions.

M&T bank and the other banks using Ex-Im programs can lend at fixed and floating rate interest rates. And under this financing you can finance packages of small as well as large items.

Financing for goods that have shipped up to six months prior to submitting application can also be provided. In this situation and this is where we would typically look to finance your particular export but ask that - the buyer if they’ve purchased anything within the last six months and then include that in the entire financing package and finance your sales as well as refinance the previous US export.

Another benefit that this type of financing is that the fees are associated - the Ex-Im fees associated with this type of lending are included in the loan amount. So there’s very smart cash outlay for your buyer up front.

And then finally I think the last but key most important points is that the overall cost of this type of financing for your buyer are usually much lower than what they find from the own banks in their own countries. And we - Ex-Im Bank lending doesn't is typically unsecured. So most lenders who use this program would not take security in the assets that we'd be financing under Ex-Im Banks medium term program.

Going into the repayment terms available to your buyers, we can typically give ten or five year financing typically with repayments on a semi-annual schedule beginning six months from final shipment.

As an exporter if you are responsible for installation of that equipment in your foreign buyers facility, repayment on the loans made under the Ex-Im program can begin in six months from completion of installation.

For extremely large transactions a seven, 8-1/2 and ten year financing may also be possible.

For transactions in the medical sector, seven year financing can also be available. And for environmentally friendly projects, the principle renewable energy projects wastewater treatment hydroelectric power plants up to ten to 15 year financing may be available.

Now moving on to the costs associated with the type of financing, banks are giving loans to your foreign buyers. So we are charging an interest rate. Typically most banks - M&T Bank and most banks that use this program would lend a six months US dollar LIBOR plus a margin. And the margin the banks charge depends on the characteristics of the transaction including the term of the loan, the borrower’s strengths and the market conditions.

Also fixed rate financing is also available. And given where interest rates are at this time it’s a very attractive option. So it would just be up to the lender and your buyer’s choice to see what type of interest rates they would prefer under this type of financing.

Now the other fees associated with this type of financing include the Ex-Im exposure fee which Kyle explained earlier. The Ex-Im fee is rolled into the financing. And that fee is based on the country and the term of the loan.

The next fee associated with this type of financing is the M&T Bank facility fee. And that is the fee that’s paid at loan closing. This fee usually is 1% to 1-1/2% of the loan amount. And this fee, the facility fee as well as the (next fee), the legal fees associated for the loan documentations are the only fees that your buyer has to pay up front.

But these aren't even paid until after approval of the transaction. So the entire time while we’re working with you and your foreign buyers there is really no cash outlay for your customer and it doesn't cost you anything at all all the way through the process. So this is a great product to explore with your customer.

Going into legal fees, we charge legal fees because we lend unsecure. We don't take a lien or mortgage on the equipment that we’re financing. But we do want to make sure that we have the loan agreement and promissory note in pretty - so locked up pretty tightly I guess to make sure that it’s enforceable in a foreign country.

And then finally for loans greater than $10 million, Ex-Im Bank will charge a commitment fee of 1/8 to 1% on undispersed balances. And that would come into play only 60 days after approval. And that’s because when Ex-Im makes a particularly large transaction they’re actually setting money aside for your foreign buyers so that they can buy products from you.

Now going on into how we fund, we can fund in four different ways. The first is we can reimburse you, the US exporter after you ship the goods to your foreign buyer or we can reimburse the buyer after shipment.

We can also open a Letter of Credit to you and then you can draw upon the Letter of Credit after shipment. In these first three methods of funding we would need your invoice, a bill of lading and what Ex-Im Bank calls the Exporter Certificate.

And the fourth way of funding is we could pay you the exporter as your buyer certifies to your satisfaction of contractual milestone.

So basically this is a way to get payment for your goods prior to shipment. This is usually limited to larger transactions but it - we could explore it on for smaller transactions as well.

Now here’s an example of a possible transaction. This is what it would look like for your foreign buyer.

If your sale is $2 million we would ask the buyer to make a 15% down payment to you. And we would finance the remainder of the contract -- $1.7 million. That repayment term is typically like I said, five years. For certain industries it can go a little bit longer. So we'll stick with five years because that’s generally what we are willing to offer.

The Ex-Im Bank fee in Mexico again, this fee is based on the size of - or the term of the loan as well as the destination country of the export. And in Mexico the Ex-Im exposure fee is 1.82% of the loan amount.

So as you can see the total amount of the loan is 85% of the invoice value plus the Ex-Im Bank fees associated with this type of financing.

In this example we are charged an interest rate because we are giving a loan to your foreign buyer. We would charge six month LIBOR. And at this time it’s about 1.75% -- pretty low in the spread. And that spread is based on again, the quality of your foreign buyer and - or the quality of the credit strength of your buyer and market conditions.

And we would look to your buyer to make ten semiannual installments over the next five years. And in this example the principle payment is 1/10 of the loan amount. The interest associated with this type of financing is, for the first year is about $70,000.

The bank fees and the legal fees are the only two fees that are paid out up front so and these fees don't even come into play until after Ex-Im Bank had approved your transaction. So your buyer - we would ask that your buyer pay us about $25,000 up front after approval. And once they do that after the transaction’s been approved we can fund - either reimburse them for payments made to you or pay you once we have proof of shipment.

Going into the credit process it’s important for a bank to get involved relatively early in the sales process because there are a few steps that we need to go through.

So first is the information collection and assembly steps. And that’s where we are learning about your customer, about your transaction and whether or not it would qualify for Ex-Im support.

If we believe that there is likelihood of approval by Ex-Im Bank, M&T bank would prepare a credit memo and send it to Ex-Im Bank who would review it for technical completeness and they would review M&T’s credit analysis on your foreign customer.

If they approve the transaction we would move to the documentation phase where we would get our legal counsel to prepare a promissory note and loan agreement. And once the financing is in place and put into our system we can disburse funds either to the exporter once you ship or to the buyer if they've already paid you. Or if you ship the goods we can have opened the Letter of Credit for you and you can draw under the LC at that time.

And finally once you guys draw under the LC as exporters or get paid for your export sale you can move on to your next transaction and M&T Bank would look to your buyer for repayment over the next five to seven years.

In terms of credit information it’s helpful to know the history of the company since we are giving a loan to your foreign buyers so they can buy your goods and equipment. We like to know general data about the company, what they’re doing in the market, their market position, the administrative structure. We want to know who owns the company and basically what their goals and mission is.

We also look for the - we also review the financial strength of the company. We look at audited financial statements from the last three years of operation and the most recent interim results.

If your buyer doesn't have audited financial statements we can work with your buyer’s local bank. You can act as a guarantor for a loan that we've made. But because we’re not taking security in the assets we want to make sure that the buyer has the historical abilities at least on paper to repay.

For certain transactions under $5 million we can also accept Spanish language financial statements. So that might be helpful for you guys selling in Latin America.

And when we say audited financial statements while big four accounting firms statements are always preferred it’s not always the norm in some of these countries. So we can look at local auditors as well.

Another piece of useful information in compiling the applications to send to Ex-Im Bank is the reference letters. We look for reference letters from companies that are currently doing business with your potential buyer.

We look to banks and other commercial suppliers. They don't have to be US suppliers or US banks. They can be local banks as well.

And finally we look for your pro forma invoice. We want to make sure that there is a US export involved because we can't access Ex-Im Bank financing without having a US exporter involved in the transaction.

Now in terms of getting a transaction approved, the key borrower strengths include much - I guess similar characteristics that you would look for when - or that your local bank would look for when lending to you.

We want to make sure that your customers have a long operating history, have a significant sales volume. We want to make sure that they have tangible net worth and experience borrowing from banks. It doesn't have to be a US bank. It doesn't have to be in dollars. But we want to make sure that they have the experience managing term loans.

The quality of the financial statements always helps. And if they don't have audited financial statements or any of these key factors mentioned on the slide, we can always work with their bank to act as a guarantor. And typically most banks would be able to qualify under Ex-Im Bank standards in most countries.

And finally we look for a company that has ample debt service coverage. And we want to work with companies who are only undertaking a moderate expansion. We wouldn't want to finance a $10 million loan to a company who had $10 million in sales last year.

We probably look to finance over $3 million of equipment to a company who had $10 million in sales. We just want to make sure that the buyer has the ability to repay based on their historical financial statements. We don't want them to get in over their head and have to use taxpayer dollars in taking out a bank (sic) when they didn't have the ability to repay.

So we just want to make sure that you can make your sales but we want to make sure that we’re supporting reasonable sales.

In terms of credit documentation we don't take a lien on the assets but what we - that we would finance. But we would just look to have your buyer sign a credit agreement promissory note. We would ask for their Articles of Incorporation and their corporate borrowing resolution.

And we want to make sure that the people signing our promissory notes and credit agreements have the authority to sign.

And we do all this just to make sure or in lieu of taking securities. But we try to lock in our documentation just to make sure that the people signing the note have the authority to undertake this type of debt before we pay you or reimburse your buyer to make sure that the transactions being supported are locked up pretty tightly.

Finally we will ask for a legal opinion from your buyer’s counsel. And that is the one fee that really isn't included in the legal fees slide but that’s where your borrower would have to get their attorneys to tell us that they are - they've been in business, they’re able to undertake international loans for the purchase of US goods.

And here is our contact information. I'm at the bottom. Again my name is Jackie Tanenbaum. But you can call anyone on our team if you have questions about Ex-Im financing. I should note that (David Cook) and (Michael Cusack) listed on this slide can speak Spanish. And they can talk to your buyers in Latin America. That’s always helpful.

Otherwise call any of us and we'd be happy to work with you in providing financing to your buyers. And I'm going to pass the call over to the moderator Linda who will be able to help facilitate questions and answers for Gus and Kyle Jackson and myself. Thank you all.

Linda Abbruzzese: Thank you Jackie and thank you Kyle for an excellent presentation. I would like to remind everybody that we will be taking written invoice questions.

To download a PowerPoint presentation slides, once again on the upper right-hand corner there is an icon that looks like three pieces of paper. You can click or put your mouse over that icon and download both of these PowerPoint presentations onto your computer.

I'd also like to let you know that due to some kind time constraints it is at the top of the hour, we are going to take a couple of written questions. And then we are going to turn it over for voice questions.

But keep in mind that please submit your written questions because we will get back to you or the speakers will get back to you even though we are going to be taking the majority of our questions through the operator.

So the first written question that I have is from (Ismar Hashini). His question is, is how can I fund a project in Iraq? The new business which I'm going to open is in Iraq. And I'm going to open this up for our panel.

John Richter: Hello. John Richter here, Senior Vice President for Small Business at the Export-Import Bank, very interesting question. Remember in Kyle’s presentation we were talking about country limitation schedule. The availability of Ex-Im Bank in any particular country is typically tied to many different factors including economic stability, political stability and things like that.

And our product, the insurance and the guarantee actually cover against dangers in that country such as war and insurrection.

As a result of the ongoing conflict in Iraq, we are not currently available for transactions headed directly for Iraq.

However, with some sort of guarantee from a neighboring county’s bank such as Jordan or Turkey, Ex-Im Bank would be able to support a transaction for the ultimate destination for the product was in Iraq but of course the risk would have to be outside of that country.

Linda Abbruzzese: Okay great. Thank you John. Next question here is from (James Knight). The question is, is I'm interested in financing for agricultural goods from the United States. This would be more of a short term type financing with turnaround around three months or so. Do you have something like this?

Kyle Jackson: Yes, excellent question. We do. You are correct. We have what we call a short -term facility. We have several short term products that have been utilized quite frequently to finance bulk grain purchases to foreign buyers.

And, you know, typically terms or 90 days and or less.

In addition I would encourage you also to reach out to the Department of Agriculture. They themselves have a bulk grain of financing product that would allow for the financing of large commodities to foreign buyers.

And they actually can provide longer terms, typically anywhere up to two years. And so but however there are financial products available to support these purchases.

Linda Abbruzzese: Great. Thank you Kyle. Now I'd like to open up the lines to ask a voice question. Operator?

Coordinator: Thank you. At this time to ask a question please press star followed by 1 on your touch-tone phone. You will be prompted to record your name. To withdraw your request please press star followed by 2. Once again that is star 1 on your touch-tone phone to ask a question please.

Our first question is from (Philip Irwin). You may ask your question.

(Philip Irwin): Hi. Yes. We've got a situation where we have - we are looking at supplying equipment to Russia. And we are working up - we've done like a technology transfer agreement where we supply sub assemblies to this Russian entity. And they do final assembly.

So my question is we understand about financing capital goods. But what about US manufactured sub assemblies later on assembly at a foreign point of manufacture?

Kyle Jackson: The quick answer is yes. We can generally provide support. We've done this for other manufacturers that effectively provide for lack of a better term (pits), to foreign, you know, to their foreign customers and/or to partners, strategic partners they have overseas that will assemble their products and then basically sell their product into that market.

Ex-Im Bank financing would be limited to the value of the subassembly of the kit once it leaves actually your manufacturing facility.

In addition there are ways to actually provide financing to the ultimate end user of that product. We would not be able to support any value added that the - your foreign strategic partner is bringing to the transaction. But

again, we could provide financing based on the value of the goods when it left your manufacturing facility.

What I would do to find out where Ex-Im Bank is eligible, we are eligible to support transactions like this in Russia is again, visit our country limitation schedule to see what other markets Ex-Im Bank can provide support in just in case goods are being sold from Russia into other markets.

Woman: And then one thing I would add too if you are selling kits over into Russia the term of financing that Ex-Im Bank would typically offer is going to be limited to about the time that those kits are inside your buyer’s facility.

We wouldn't want to use taxpayer dollars to give five year financing if those kits are only going to stay in for about, you know, six to eight months or perhaps even shorter.

And then if your customer if these are, you know, kits that can go in on - or that would be considered a capital good for the final end buyer we could provide longer term to that final end user of the kit.

Man: Operator, we’re ready for the next question.

Coordinator: Thank you. Our next question is from (Kurt Warner). Your line is open.

(Kurt Warner): Thank you. A follow-up question to that one. I'm working with the solar company. And so the parts, the kit that we would send over, it’s actually cheaper to buy a lot of that material over like in China and do the assembly there for that particular market.

But the value of the product is in the intellectual property and the idea of putting all this together. And there’s probably less than 50% of the content is 0 would be US-made. And then the rest of that we would buy there and assembled there.

So this is again solar panel renewables. So if I understood you right, that means that the value of the loan would be only for six months or less depending on how long the kits were in stock. And that’s it. Is that true?

Kyle Jackson: If I understand the nature of your question yes. I mean Ex-Im Bank’s coverage would be limited to the time those kits would spend basically in the Chinese facility being assembled. And then obviously they’re going to be resold. So we would be limited by that factor.

So in your scenario if you’re saying that you sell ultimately a unit in China for $100 however the value when it left the United States is only 50, our financing would be limited, both to the $50 as well as let’s say if it took three months to assemble these and then resell, you’re looking at terms of approximately anywhere from 60 to 90 days.

(Kurt Warner): So there’s no value that Ex-Im Bank puts on the engineering portion of it? So there’s no way to recover that cost or that value of engineering which is intellectual property that goes along with the materials because you can't just throw the materials together and make this work?

Kyle Jackson: Understood. To the extent that your company has additional obligations I think it’s safe to say - I don't want to say there’s no value add to that. What I will say is I'm not an engineer and so I can't speak to some of these elements. It may be better suited for Ex-Im Bank to provide you a more detailed answer in writing to speak to some of these issues.

What you’re talking about is certainly - it’s an element of the new economy that obviously services licensing agreements, things of that nature are becoming more prevalent with respect to export value from the United States. It is an area that Ex-Im Bank is looking at and trying to work with.

So I think it may be more appropriate in all honesty for us to get more information to provide you a more detailed response.

(Kurt Warner): I would really appreciate that. And then do you need anything from me over the phone or because I've got all my information for registration you guys can get back to me or should I follow-up with somebody?

Linda Abbruzzese: Are - you have our - you want his contact information, Kyle’s contact information? We can give it to you.

(Kurt Warner): That’d be great.

Kyle Jackson: Yes, the best thing to do is to email me. My direct email is Kyle, K-Y-L-E .jackson@exim E-X-I-M.gov.

And in your email if you could provide a scenario of what you’re talking about just very briefly summarize this is what a transaction would look like. This is the value that we’re placing on both not only the core components but obviously the technical and engineering systems that’s going forward. And with that information I'll be able to - we actually have engineers on staff at Ex-Im Bank that look at these issues. So I'll be able to work with them and get you a detailed answer.

(Kurt Warner): Okay. Thank you very much.

Linda Abbruzzese: Great. Next question?

Coordinator: Next question is from (Tamock). Your line is open.

(Tamock Tico): Hi. My name is (Tamock Tico). I am from company (Sitelca). I work for a integration satellite communication equipment and broadcast equipment. And my question is, is there any for Export Certificate for that document that must be accepted by Ex-Im Bank? Is there any identified proportions between the labor of US local labor and for imports?

Jackie Tanenbaum: No there’s not - there’s a chart on that Exporter Certificate. And basically it’s up to you to break down the content. And that content could be, you know, parts as well as labor of the products that you’re asking Ex-Im Bank to finance.

(Tamock Tico): Okay I understand. I understand. So the product, the final product will have a label, made in US. So that’s 100% financial correct?

Jackie Tanenbaum: That would be up to you to certify on your Exporter Certificate. There some certifications at the end of that certificate. So whatever you’re comfortable certifying to and what you know based on the products that you are importing to assemble in the United States it’s always up to you as an exporter what you’re comfortable certifying to. But I'd suggest checking out that Exporter Certificate on exim.gov.

(Tamock Tico): Okay. Thank you very much. It was very clear for me.

Linda Abbruzzese: Okay thank you. Next question?

Coordinator: The next question is from (Algit Agupta). Your line is open.

(Algit Agupta): Yes this is (Algit). We are an exporter of environmental products and services. And the question I have is what kind of technical interest rates do we run into with Ex-Im Bank and the associated banks here to be able to offer to our buyer relative to local lenders?

Kyle Jackson: Right. I'm going to answer a portion of this question and then I will turn it over to Jackie Tanenbaum.

Again, it’s important to note that Ex-Im Bank typically is not the lender in a transaction. We are providing basically a financial enhancement that will allow the transaction to go forward.

That said, we do not determine interest rates. While we support the interest rate, the interest rate is a determination and negotiation between your buyer and the lending institutions such as M&T Bank.

Now rates in the market can be based on several different things. It can be based on a fixed rate as was indicated earlier or it could be based on a floating rate. It can be based on some type of floating rate basis plus a spread.

As Jackie indicated and she can get into greater detail, that may be dependent upon the markets you’re in, the size of the transaction and other factors related to the transaction.

I've seen rates just to give you an example but this by no means should be taken definitively of what a transaction spread will look like, I've seen fixed-rate loans of 4.6% and upwards to around 6.5%, 6.8%.

I've also seen floating rate loans that are based on the London Interbank offering rate which is around 3% today give or take plus additional spreads of anywhere from 2% to 3%.

But again, the interest rate itself will be determined by the bank.

The rate Ex-Im Bank will charge and the primary rate Ex-Im Bank will charge is the exposure fee. That exposure fee will be determined by several factors expected in the transaction itself and also including the country it is in.

The exposure fee can be as low as 1.8% or 2% to say for a transaction in Mexico and as high as 8% or 9% or 10% for a transaction let’s say in Nigeria. So that is the fee that Ex-Im Bank would determine and again, keep in mind it is a fully financeable fee. Jackie, did you want to make some comments?

Jackie Tanenbaum: Yes I'll just add on top of that. Kyle’s pretty on target with the fixed-rate and the floating rate. Again the rates are always set just based on the risk. We want to make sure that your buyer - I mean it’s always based on the credit strengths, the years in business, the audit and financial statements.

It doesn't cost you anything to get in indicative quote just to see what we would charge your foreign buyer. So this is where it’s important to get involved with the banks really early in the sales process.

If you want to tell us the amount of your sale and send us your buyer’s financial statement or have your buyer send your financial statements to us we can run a quick analysis and provide a term sheet. It doesn't cost you anything and we can get out to you rather quickly just so you can have something in writing.

But yes, the fees are - the interest rates going vary really unaware from LIBOR plus a half a percent if you’re lending to - if you’re selling to a government. And it can go up to LIBOR plus, you know, 4% for a medium-sized corporate.

Anything that’s over that if you - you kind of wonder sometimes if the buyer really has the ability to repay if they’re willing to pay anything a little bit higher. So we try to kind of stay within that range.

And then finally you have to look at it from our perspective too. We’re lending with a Ex-Im Bank guarantee. So we don't want to charge too much higher. So LIBOR plus 4 is probably the ceiling because we wouldn't want to use taxpayer dollars to make a ridiculous amount of profit on these loans.

Kyle Jackson: The last part of your question regarding interest rates your borrower may pay in country, that’s heavily dependent upon markets your buyer is located in.

For example, my area of expertise happens to be Africa. You know, typically for several of the markets that I work on on a daily basis you’re looking at domestic interest rates of anywhere from 17% to 25% generally on loans with repayment period of less than three years.

So, you know, typically it is still more cost effective for them to secure financing from M&T Bank which is different from Ex-Im Bank than going to a local bank because A, they’ll get longer terms and the all-in costs will still be cheaper.

Jackie Tanenbaum: And they’re not putting up any sort of security for these types of loans to. So that’s always an important selling point.

(Algit Agupta): All right. So that’s the kind of question I guess the buyer sort of is asking to - from us as far as what options do they have for financing relative to local lenders versus going out to a US-based financing institution. And that’s why I had the question.

So I appreciate your answer. I think obviously that puts us in a good position as far as relative rates between a local bank versus the Ex-Im supported or Ex-Im supported bank in the US. So we’ll see what happens.

Kyle Jackson: Sure. And one more point to add on. Jackie did mention that generally most of Ex-Im Banking financing does not include a security charge. However, there are some instances where Ex-Im Bank may require some type of mortgage to be taken out over the asset.

So it’s not 100% that Ex-Im Bank lends without security. However ultimately I can assure you that our lending, our requirements are far less stringent than what most domestic buyers will be able to access in their own country.

(Algit Agupta): Okay great.

Linda Abbruzzese: Okay we’ll take a couple more questions.

Coordinator: The next question is from (Kurt Ward). Your line is open.

(Kurt Ward): Hi. Do you guys have any problems with doing loans into China or any parts of China?

Jackie Tanenbaum: I would say maybe I’ll let Ex-Im Bank speak for themselves. But I would say M&T Bank, no we haven't had too many problems. The one thing with China is that we have a hard time getting clear financial information out of their medium-sized corporate.

Companies that are traded on like the stock exchange, you know, Hong Kong Stock Exchange or some Chinese companies actually are traded on the American Stock Exchange, it’s not too hard to get financial information out of that.

But for the other transactions or for some companies it’s a little bit harder because you can't find audited financial statements -- bank reference letters -- that type of thing. But...

(Kurt Ward): That was kind of what I was addressing is not - not the mega corporations, that’s easy. It’s the smaller medium businesses.

Jackie Tanenbaum: We have some experience. But typically we would look for a Chinese bank to act as the guarantor because then we could just use the financial strength of that bank and not really worry about the financial credit quality of this buyer itself.

(Kurt Ward): Okay.

Jackie Tanenbaum: And then Ex-Im, did you guys want to go into the sign up program?

Man: Yes. Actually China is a bit of a more complex market simply because of the issues that Jackie was talking about. But in fact just three years ago we negotiated and signed a memorandum of understanding on which transactions would receive export credit agency enhancements with the Bank of China and with the Ministry of Finance there.

As you may know, they like to control the inflow and outflow of currencies, our currency. And so they wanted to have in place this memorandum so that they have to look at every single transaction that we get involved with from Ex-Im Bank’s side.

(Kurt Ward): Is that memorandum available to us?

Man: No. I think it’s a government to government document.

(Kurt Ward): Okay.

Jackie Tanenbaum: There has been some experience under this program as far as I know. So I mean it does work. And if you have the Chinese transaction I would say that’s calling into Ex-Im (at the) local office.

Man: Right. Yes, what I would recommend to the extent that if you are currently looking at pursuing business there or have potential customers is that to contact us immediately. Get us engaged as soon as possible so that we can reach out to our counterparts in China and also to the banking communities to see what due diligence needs to be done.

Obviously it’s a challenging market because of transparency issues. But we do have some success there on some levels.

(Kurt Ward): Are you guys on the front of India, are you pretty good with that and that’s pretty straightforward and no real issues they are or are there some things that we need to be aware of?

Man: No significant issues in India. In all honesty Ex-Im Bank, you know, we used to be quite active in that market. And then the Indian banks actually were competing effectively and being able to pursue financing (of the) assistance of Ex-Im Bank.

We are seeing an uptick in our activity there. There are no significant issues with respect to availability of information or transparency.

The one issue in India is like many countries again, I mean there are some regulations that control the outflow, inflow of foreign exchange. But many transactions have to be approved by the Reserve Bank of India. And so typically this would be done with the lender working in conjunction with a foreign borrower to get the approval.

But for the most part India’s the market that Ex-Im Bank is very interested in. We do a tremendous amount of business there these days and we would like to do more.

(Kurt Ward): Okay. And same question for Barbados?

Man: Not a market we’re heavily engaged in to my knowledge.

You know, one of the important things to note about Ex-Im Banks is typically we only have a footprint in those markets where there is a lack of capital financing. I openly admit I'm not an expert on the Barbados economy. But I would argue that given the nature of the island and their current industry they’re probably aren’t significant needs for export bank financing.

This is not to say that we would not do something there should we be approached. And I'm certainly sure there are some things.

Jackie Tanenbaum: Yes I actually cover the Caribbean for M&T Bank. And Ex-Im Bank is open in Barbados. And if you have a credit worthy buyer we'd be happy...

Man: Yes.

Jackie Tanenbaum: ...happy to look at them. I mean they’re open. Their financial system is based on UK’s systems. And so it makes a lot of sense. A lot of information is easily accessible from there. So it’s a market where we’re willing to work.

(Kurt Ward): Okay last follow-up is Jackie if I was going to do any of these areas and depending on what demands are from the customers, what’s the best approach? Do I start with M&T? And is that the easiest way? And I'm talking from a user perspective. Do you make my life easier by me going to you Jackie and saying here is where I'd like to go? Can you help me out because you understand Ex-Im Bank and the banking side of it? So do you make my life easier if I go to you first or do I always have to go to Ex-Im first?

Jackie Tanenbaum: No I would say that’s going to a bank first. We know how to navigate the program. And like I said, I worked that Ex-Im Bank before I joined M&T. So I know, I can tell you real quick what’s going to fly at least from my opinion and what’s not. And it doesn't really cost you anything to work with us or Ex-Im.

Man: Yes we would always encourage you to work with a financial institution. However please, if you’re currently in a (banking) transaction and are curious to know whether or not, you know, Ex-Im Bank is supported, in some ways it still doesn't hurt to contact your regional office. Just to get a read about whether or not we’re opened in the market, are there any special concerns Ex-Im Bank may have with some markets.

But once you’re in what I would call subsequent discussions with your borrower or with your potential customer, talk to M&T Bank. Get them engaged in the process so they can be on the front end of collecting the necessary information to present a package to Ex-Im Bank.

(Kurt Ward): Okay. And is it advantageous if I go to local which is up in San Francisco and open a discussion with them only to set up a relationship that they then could guide me to who their favorite bank is locally?

Man: Yes. I would recommend that. I mean it’s important to note that not every bank lends to every market that Ex-Im Bank is open in. Some banks have regional footprints whether it be Africa, Latin America or Asia. So certainly speaking with your - with the regional representatives, they'll probably be able to tell you, you know, which banks are interested in doing transactions in China.

Moreover, some banks have certain dollar limits. Ex-Im Bank has no dollar limits. We will do anything. However financial institutions themselves, some do. Some only lend in what we call the medium term arena, again, $10 million or less. Some banks are only interested in doing larger transactions -- $25 million or more.

So again, your regional officer will be able to point you in the right direction of which banks you should initiate discussions with to make sure that you’re not wasting your time.

(Kurt Ward): Okay. I'll let it go at this and I'll let Jackie know that I'll call her and follow-up for Barbados. Thank you.

Jackie Tanenbaum: Thanks. I'll look forward to it.

Linda Abbruzzese: Okay great. Thank you. One last question.

Coordinator: Next question is from (Lawrence Bing). Your line is open.

(Lawrence Bing): Good afternoon. I have a transaction with the US military for nonmilitary goods and services installed in foreign countries. Is that something that financed through Ex-Im?

Man: Are you selling it directly to the Department of Defense?

(Lawrence Bing): We are selling it to one of the agencies, right.

Man: Yes, no. That’s not something that we would be involved in. There are some convoluted transactions where there’s a foreign buyer who is then on selling to a US operation somewhere in the world. And we have supported that because it was a foreign buyer. But as long as it’s a US agency that’s buying the goods and your contract is with them than Ex-Im Bank would not be involved in that.

(Lawrence Bing): Even though we’re shipping it overseas?

Man: No. That’s right. If you’re shipping it to a US government agency we’re not in the business of financing them.

(Lawrence Bing): What about - does that apply also for the US companies that are - we’re shipping to foreign soil for foreign applications?

Man: Is the buyer a foreign entity?

(Lawrence Bing): No the buyer’s a US entity.

Man: Yes. No than Ex-Im Bank would not be involved.

However let me suggest that the Small Business Administration does not have that military exclusion that was explained by Kyle earlier. And they theoretically could provide your company with working capital that would help you bridge that term that you need some cash flow in while you’re waiting for the US Department of Defense to actually pay you.

(Lawrence Bing): Got it.

Kyle Jackson: Yes. It’s important to note that the medium term and long term program is designed to provide financial assistance to foreign borrowers.

Effectively the Department of Defense obviously doesn't need to make decisions to purchase goods and services. However, you may need assistance as (Don) mentioned on working capital. So, you know, you might want to approach Small Business Administration because they have working capital programs that don't have the same restrictions that we have on ours. And they may be able to assist you to provide, you know, free export financing for your company.

(Lawrence Bing): Got it. Thank you.

Linda Abbruzzese: Okay great. Any last comments?

Okay great. Well thank you very much everybody. Thank you to our speakers, Kyle, Jackie, Gus and John. Thank you very much for your expertise. It was a wonderful presentation.

I'd also like to let all participants note the contact information that’s on their screen to please take note of it. We will also be following through to you based on your questions, your written questions. And we'll get back to you with answers.

Also please check out Export-Import Bank’s Website at www.exim.gov. And also check out the US commercial services Web site www.export.gov.

Just to also let you know this - these Webinars will be archived on this Commercial Services Web site www.export.gov under the New Webinars link which can be found on the right-hand side of that page. Once again it’s www.export.gov. And on the right-hand side there’s a link that will say New Webinars. And there you will find all of the Webinars archived along with transcripts and the PowerPoint presentation slide. So if any of you want to get this information at a later date you can.

Also Export-Import Bank will probably also have these archived Webinars. So you can check out their site as well.

Once again thank you to our experts, our panel, our speakers. I appreciate your time and your energy for this presentation. And also to all of our participants for joining us from all across the United States. Thank you and goodbye.

Coordinator: This concludes today’s conference call. You may disconnect at this time.

END