1. Trade Financing Solutions Export-Import Bank of the United States Increasing Your Export Sales Short-Term Insurance Overview & Single-Buyer Products

2. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Overview + Most frequently used program: Over 60% of total transactions + Total authorizations: $2.4 billion FY 2000

3. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Overview Purpose: + Provide foreign credit risk protection for exporters and lenders Covers: + Commercial & political risks of default Does Not Cover: + Product disputes + Cancellation of contract

4. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Types of Exports Supported + Raw materials, spare parts and consumable items and services: Up to 180 day terms + Capital equipment, bulk agricultural items, fertilizer and consumer durables: Up to 360 day terms

5. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Why Buy Insurance? + Risk Mitigation + Financing Aid + Competitiveness / Marketing

6. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Benefits – Risk Mitigation Risk Mitigation: Provides foreign credit risk protection against commercial risks of default, bankruptcy, and political risks of default, political violence, government intervention, and transfer or inconvertibility risk.

7. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Benefits - Financing Financing: + Ability to assign foreign A/R  Increase collateral base  Get $$$

8. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Benefits - Financing Receivables Uninsured Borrowing Base Insured Borrowing Base Annual Domestic Credit Sales $1,000,000 Annual Foreign Credit Sales 500,000 Turnover of 60 days, $1,500,000/6 = Average Outstanding 250,000 Lender’s Deductions Foreign Receivables Uninsured (125,000) Insured Policy Deductible 5% Commercial Risk Retention (6,250) Borrowing Base Availability $125,000 $243,750 95% increase! Cash Flow: ($125,000 foreign)

9. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Benefits - Competitiveness Competitiveness/Marketing: + Extend open account credit terms directly to foreign buyers  Compete with sellers from other countries + Cheaper for buyer than L/C’s + Pursue riskier buyers/countries + Sell more to existing buyers with less risk

10. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Benefits Sell more without increasing risk: + Sales - uninsured: $ 200,000 exposure: $ 200,000 + Sales - insured: $4,000,000 exposure: $ 200,000 (assuming 95% coverage)

11. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Short-Term Insurance… Product must be at least 50% US content (labor and material), excluding mark-up US Content Requirements

12. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s S-T Export Credit Insurance Single-Buyer Policies

13. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Policy Types Exporter: + Single-buyer Financial Institution: + Export Letter of Credit + Financial Institution Buyer Credit (FIBC)

14. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Single Buyer Policy - Exporter Eligibility:  Covers single or multiple sales to individual buyers  Terms generally up to 180 days; 360 days for capital goods and bulk agricultural products Coverage (Commercial & Political):  90% for private buyers  95% for L/C transactions  98% for bulk agricultural products  100% for sovereign buyers

15. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Features cont.:  No application or commitment fees  90 day commitment on approvals  Risk based premium  Minimum premium:  Sovereign / political only coverage:$ 500$ 750  L/C’s / banks / non-sovereign govt:$ 750$1,500  Private buyers:$1,000 $2,500 Single-Buyer Policy Small Business All Other

16. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Other features: Small All Small All BusinessOther  Assignment ofEnhanced/Simple proceeds to a lenderDocumentary proceeds to a lenderDocumentary or Simple  Claim filing window 90-240 Days (from due date) (from due date) Single-Buyer Policy

17. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Bank L/C Policy  Allows banks to confirm L/Cs and refinance up to 180/360 days with coverage  Irrevocable letters of credit must conform to UCP 500  95% coverage - commercial and political risk  98% coverage - agricultural products  100% coverage - sovereign issuing bank  Recourse (“passback”) to a third party for uninsured amount allowed

18. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Bank L/C Policy + Risk-based premium + Bank Credit Limits  Discretionary credit limits  Credit  Ledger  Issuing Bank Credit Limits (see STCS) + Pre-presentation cover available + $2,000 minimum annual premium + Documentary – Bank gets Exporter/ Beneficiary Certificate + Claim filing window (past due) 60 – 120 days

19. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Financial Institution Buyer Credit  Covers extension of SHORT-TERM direct buyer/supplier credit loans and reimbursement loans  Single-buyer policy  Two formats of coverage:  Documentary – Protects bank against defects in the underlying transaction (i.e., Exporter Certificate)  Non-Documentary – Bank is at risk for transaction conformance to policy  Maximum Coverage: DocumentaryNon-Doc. Sovereign obligors100%N/A Non-sovereign obligors/ guarantors 90%90% guarantors 90%90% Bulk agricultural commodities 98%98% L/C transactions Excluded Excluded

20. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Financial Institution Buyer Credit  No application or commitment fees  90 day commitment on approvals  Policy Period – up to 1 year  Risk-based premium rates  Minimum premiums (payable in advance):  Sovereign / political-only coverage:$ 750  L/C’s, banks, & non-sovereign gov’ts:$1,500  Private buyers: $2,500

21. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Other features: Other features:DocumentaryNon-doc.  Eligible transactionsBuyer Credits/All other SB SupplierSupplier SB SupplierSupplier CreditsCredits  Exporter/BeneficiaryYesNo Certificate Certificate  Claim filing window 90-240 days (from due date) (from due date) Financial Institution must remain at risk for uninsured retention Financial Institution Buyer Credit

22. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s FIBC – Direct Credit 1. Contract for Goods - outside the insurance policy 2. Buyer obligation created between buyer and bank 3. Bank pays out exporter upon presentation of trade documents 2 3 1 Bank Buyer Exporter

23. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s FIBC – Reimbursement Loan 1. Contract for goods -- basis for the insurance policy 2. Buyer pays exporter for goods 3. Bank reimburses buyer 4. Buyer obligated to pay within 180 (360) days 2 3 1 Bank Buyer Exporter 4

24. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s S-T Export Credit Insurance Multi-Buyer Policies

25. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Multi-Buyer Policy Products + Small Business Multi- Buyer:  Small Business  Environmental  Umbrella + Standard Multi-Buyer Policy + Financial Institution  Financial Institution Supplier Credit

26. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Multi-Buyer Policy Products + Common features:  Claim filing window (past due): 90 – 240 days  Cover capped at WSJ prime < 0.5% (does not apply to FISC)  Shipments (financings) reported month-to-month basis

27. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Small Business Policy Ex-Im Bank’s most popular product Eligibility: At least 1 year of successful operations + Positive net worth + At least 1 principal engaged full time in company + No more than $5,000,000 in average annual export credit sales over prior 2 years + Meets SBA definition of “small”

28. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Small Business Policy Features: + 12 months, renewable + Whole turnover + 95% commercial, 100% political coverage + Buyer credit limits  Discretionary credit limits  Credit  Ledger  Special buyer credit limits (see STCS) + $500 refundable advance premium + Enhanced or simple assignment of proceeds to a lender

29. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Small Business Policy - Premia Premium Rate Schedule Note: Premium is charged per $100 of gross invoice value. Payment Terms (days o/a) 1-60$0.19 $0.24$0.65 61-1200.32 0.391.06 121-180 0.41 0.501.35 181-2700.51 0.631.70 271-360 0.62 0.772.08 Transaction Type Class I Class I I Class I I I

30. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Small Business Policy Sample Annual Export Credit Sales:$2,000,000 Std Credit Terms Extended:60 days Aggregate Policy Limit:$500,000 Deductible:$0 Premium Rate:$0.65 per $100 of gross invoice value (from rate sheet) Exclusions:Confirmed irrevocable L/C Sales to subsidiaries/affiliates Special Conditions:Preshipment Consignment Payments in foreign currency Nonacceptance Discretionary Credit Limits:Credit $25,000 Ledger $50,000

31. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Assignment of Policy Proceeds Simple Assignment  Lender maintains recourse back to exporter (eg, Policy violations resulting in claim denial) OREnhanced  Available under small business policy  Bank obtains documents related to transactions, e.g.:  Copy of invoice  Export bill of lading  Purchase order

32. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Benefits to Banks:  Claim payment is made to assignee regardless of provisions of the policy which would be reason for claim denial  Bank may file claim in place of insured but must have all required documents  Bank is paid; Ex-Im Bank pursues buyer or exporter  No risks to Banks beyond their control “Enhanced” Assignment

33. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Small Business Environmental Policy Eligibility: + Same as Small Business Policy + Products/services environmentally related Features: + Same as Small Business Policy, including “Enhanced” assignment + No export credit sales volume entry or exit threshold provided continued eligibility as “small” business

34. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Eligibility:  Covers SHORT-TERM sales made during a 12-month period  Reasonable spread of risk Coverage:  Option A: 90% commercial, 100% political; or  Option B: 95% for commercial and political risks  100% on sovereign buyers  98% for bulk agricultural products Multi-Buyer Policy

35. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Multi-Buyer Policy Premium: + $500 refundable advance premium + Risk-based premium:  Payment terms  Type of buyer  Spread of country risk  Transaction type  Previous export experience + First loss deductible + Simple assignment of proceeds to a lender + Claim filing window (past due) 90-240 days

36. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Financial Institution Supplier Credit  Lender financing export A/R on a select basis  $2,000 minimum annual premium Two formats:DocumentaryNon-doc. Eligible exportersSBSB – all other ENB Policy < $5,000,000 avg. annual export Exporter CertificateYesNo Percentage of coverage Sovereign100100 Political100 90 Commercial 95 90 Bulk ag. 98 98 Premium ratesSB r/sCountry r/s  No cap on interest rate  Lender must remain at risk for uninsured retention

37. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s ST Rate Sheet MEXICO Short Term Single Buyer Insurance Term Sight LIC CAD/SDOP 1-60 61 -1.20 121 -180 181 - 270 271 - 360 SOV/POL/PS:$0.04$0.07$0.19 $0.32 $0.41$0.51$0.62 F.I.: $0.04 $0.09 $0.24 $0.39 $0.50 $0.63 $0.77 NFI: $0.12 $0.24 $0.65 $1.06 $1.35 $1.70 $2.08 Pre-Presentation for Letters of Credit Term Sight - 90 91 –120 121 -180 181 - 270 271 - 360 SOV: $0.04 $0.05 $0.07 $0.11 $0.15 F.I.: $0.04 $0.07 $0.09 $0.13 $0.18 Sov= Sovereign; POL=Political Only; PS=Preshipment; F.I. = Financial Institution (public/private); NFI=Non Financial Institution (public/privato)

38. E x p o r t – I m p o r t B a n k o f t h e U n i t e d S t a t e s Insurance Claims - FY 1999 Claims Filed *:218$48.1MM Claims Approved:16495.5% Claims Denied: 292.1% Claims Withdrawn: 181.5% Reasons for Denial:  No Premium  Missing Documents  Late Filing * 100% Commercial Risk