Financing Exports: Government and Multinational Programs
Financing Exports: Government and Multinational Programs
University of Miami Inter-American Law Review 0
Peter A. Hornbostel 0
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Follow this and additional works at: http://repository.law.miami.edu/umialr Part of the International Trade Commons Recommended Citation Peter A. Hornbostel, Financing Exports: Government and Multinational Programs, 11 U. Miami Inter-Am. L. Rev. 285 (1979) Available at: http://repository.law.miami.edu/umialr/vol11/iss2/3
Financing Exports: Government and Multinational Programs
PETER A. HORNBOSTEL*
I. INTRODUCTION
This discussion concerns export financing and will deal
principally with the Export-Inport Bank of the United States (Exiinbank)1
and, to a lesser extent, with other federal government programs, such
as the Overseas Private Investment Corporation (OPIC) 2 and the
Agency for International Development (AID). 3
Eximbank has a plethora of financing programs, ranging from the
very short-term to long-term, up to twelve or fourteen years. In
dollar terms, most Eximbank financing (perhaps two-thirds) is of a
longterm nature, and I anticipate that most of you will be more interested
in this type of financing, especially if you are representing foreign
borrowers or suppliers of major equipment. The shorter and
medium-term financing plans would be of greater interest to those
representing banks or small suppliers; I will not discuss those
prograins.
II. EXIMBANK LONG-TERM FINANCING
A. Obtaining the Preliminary Commitment
Attorneys representing a foreign borrower will almost certainly
be interested in looking for long-term financing from Eximbank. The
borrower will usually be involved in a project of some sort; for
example, he may be involved in constructing a petrochemical plant, a
cement plant, a steel mill. In other cases, the borrower will be
pur*Cameron, Hornbostel, and Adelman, Washington, D.C. Mr. Hornbostel is a
graduate of Columbia University Law School and also studied at the University of
Vienna, Austria. Formerly a legal advisor to the Agency for International
Development in Brazil and Washington, he has been engaged in the practice of law
in Washington for over ten years specializing in international transactions involving
Latin America.
1. 12 U.S.C.A. § 635-635n. (West Supp. 1979). For legislative history see
generally [1953] U.S. CODE CONG. & AD. NEws 1643; [1974] U.S. CODE CONG. & AD.
NEWS 2711.
2. Overseas Private Investment Corporation, 22 U.S.C. §§ 2191-2200a (1970).
For legislative history see [1969] U.S. CODE CONG. & AD. NEWS 2611.
3. See Exec. Order No. 10,973, 3 C.F.R. 493 (1961), reprinted in 22 U.S.C.
§ 2381 (1970).
chasing non-project products, such as airplanes, locomotives or
railroad cars.
The first step generally taken in arranging for this type of
Eximbank financing is to obtain a preliminary commitment, 4 which will set
out and guarantee the terms of the transaction. While it is not
required that you obtain a preliminary commitment, it is often
advantageous to do so. For example, if a borrower has a preliminary
commitment at a time when the interest rates from Eximbank-which
today run somewhere between eight and nine percent-are rising,
that borrower will receive the rate of interest established in the
commitment, as long as the borrower's application for the final
commitmnent is filed timely. 5
Eximbank requires the following information from a borrower
seeking a preliminary commitment: the name and address of the
borrower; the purpose of the proposed financing; the foreign country
involved; a description of the equipment or services to be purchased
with the financing; a copy, of the bid documents, if the borrower is
responding to a bid invitation; the latest audit and financial
statements of the borrower; and the nature of the security or guaranty, if
any, that the borrower is going to provide. 6
The Bank will also request the borrower's projected financial data
for the next five years. 7 Although Eximbank may want this
information, it is often virtually impossible to produce. I have never given
the Bank such data at the preliminary commitment stage. Further,
such information is not very useful where the borrower is a young
company just getting started. In such a situation, any kind of guess as
to a five year projection of earnings is exactly that: a guess. Eximbank
can guess that just as well as the borrower. Nonetheless, the Bank
likes to have a piece of paper showing the borrower's anticipated
earnings, if only so that if questioned by Congress or government
auditors, Eximbank can refer to the projection and say that the loan
has good possibilities of repayment. I As I have said, I do not usually
4. See 12 C.F.R. § 401.1(c)(5) (1978); Streng, Export Financing, 11 SAN (...truncated)