Budget measures: EDC’s implementation BCAP Committee meeting Toronto, April 2 nd, 2009

22 Agenda EDC’s New powers Principles governing implementation of new powers Actions  Receivables Insurance  Surety Bonding  Financing Discussion and Next steps

3 EDC’s Powers under the Budget $350 mln additional Capital Limits of paid in Capital increased from $1.5 bln to $3 bln Contingent liability limits increased from $30 bln to $45 bln Canada account ceiling increased from $13 bln to $20 bln Domestic powers approved for 2 years  Ability to support domestic trade BCAP initiative to work in collaboration with BDC and the private sector financial institutions to increase credit availability

4 Implementation of New Powers Governing Principles EDC provides complementary capacity to banks and insurers :  It does not displace them  Risk-sharing is a required condition Private sector financial institutions retain their relationships with companies. EDC continues to operate within its areas of competence  Trade-related; excludes a few sectors such as real estate, wholesale and retail distribution… Support is on commercial terms Support is to viable counterparties Equity powers not changed by the budget

5 Trade finance and risk management of exports and investment remain EDC’s primary long-term focus and competency. EDC adds to the domestic market in 3 broad areas:  re-insurance to provide additional capacity to credit insurers.  re-insurance and guarantees to provide additional capacity to the surety industry;  as a lender to domestic borrowers facing challenges raising sufficient credit by way of guarantees to financial institutions and as a direct lender Implementation of New Powers Actions

6 Credit Insurance Domestic Buyer Coverage EDC is negotiating re-insurance agreements with each private sector insurer active in the Canadian market. Guiding principles :  Help private insurers continue to provide coverage to their clients; share risk to cover gaps.  Private capacity must always be present. EDC’s exposure should not be higher than that of private insurer.  EDC does not provide direct coverage of domestic risks - except in exceptional circumstances such as in the auto sector Companies should approach their insurance company or broker EDC’s coverage of export receivables does not change

7 Surety Bonding in the Domestic Market In general, there appears to be adequate capacity in the domestic market today  this may change with the number of infrastructure projects being planned EDC will leverage existing agreements with sureties, banks and customers to provide additional capacity if required  New, incremental commitments only, not existing exposure  Commitment related to contract performance; EDC will not consider bid, reclamation, utility or regulatory bonds.  No regulation tests, most sectors Companies should approach their existing surety provider(s)

8 Domestic Bonding PSG and FXG Expand the PSG and FXG programs with Banks and other Financial Institutions in the domestic space No regulations test, in most sectors  Will be careful not to distort market with potential shift from surety instruments to demand instruments Similar requirements to surety  New commitments only Must be existing bank customer Companies should approach their existing financial institution

9 Domestic Financing EDC is “part of the solution” rather than “the solution” Expand availability of direct financing in the domestic space  Remain within EDC’s areas of competency  Act as a direct lender or a guarantor  Leverage private participation When will EDC get involved ?  New Business and regular Renewal Business  EDC will consider participating, with particular regard for the benefits to the customer  “Sudden withdrawal”  EDC will consider replacing a departing foreign lender  Facilities restructuring  no “taking out” existing lenders. Everybody needs to remain involved

10 Domestic Financing Export Guarantee Program Expand the EGP into the domestic space  Existing program, ensures optimal time to market  Documentation under review for any required changes  By definition a risk-sharing program with the private sector  No longer the need for a “regulations” test Companies should approach their existing Financial Institution

11 Leverage relationships with the financial industry to deliver needed capacity to Canadian companies Principles  Act in response to and alongside Financial Institutions  EDC does not aim to be largest single lender; rather intent is to provide “top up” capacity to facilities  Anchor or sole lender only on exception basis Companies should approach their Financial Institution Domestic Financing BCAP

12 Key areas for continued discussion  Freeing up working capital under EDC guarantees  Treatment of Credit Insurance in margining formulas  Maintenance of capacity, and redeployment of “relieved” capacity Next steps  Bilateral consultations to continue in order to finalize process  Keep monitoring and adjust through dialogue Discussion and next steps