Notice2021-27835
Information Request on Potential Parameters of Export-Import Bank Financing for Domestic Projects
Primary source
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Published
December 23, 2021
Issuing agencies
Export-Import Bank
Abstract
The Export-Import Bank of the United States (EXIM) is soliciting comments and feedback concerning a recommendation resulting from Executive Order 14017 on America's Supply Chains. The report "Building resilient supply chains, revitalizing American manufacturing, and fostering broad-based growth", recommends that EXIM consider developing an option to provide financing in support of the establishment and/or expansion of U.S. manufacturing facilities and infrastructure projects in the United States that would facilitate U.S. exports. EXIM requests: (1) Comments on the usefulness of such an option and need for EXIM to extend its medium and long-term loans and guarantees to domestic projects as described in the E.O. 14017 Report recommendation; and (2) Feedback on the hypothetical parameters of such an EXIM program as described in the "supplementary information" below.
Full Text
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<title>Federal Register, Volume 86 Issue 244 (Thursday, December 23, 2021)</title>
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[Federal Register Volume 86, Number 244 (Thursday, December 23, 2021)]
[Notices]
[Pages 72967-72968]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-27835]
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EXPORT-IMPORT BANK
Information Request on Potential Parameters of Export-Import Bank
Financing for Domestic Projects
AGENCY: Export-Import Bank of the United States.
ACTION: Notice.
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SUMMARY: The Export-Import Bank of the United States (EXIM) is
soliciting comments and feedback concerning a recommendation resulting
from Executive Order 14017 on America's Supply Chains. The report
``Building resilient supply chains, revitalizing American
manufacturing, and fostering broad-based growth'', recommends that EXIM
consider developing an option to provide financing in support of the
establishment and/or expansion of U.S. manufacturing facilities and
infrastructure projects in the United States that would facilitate U.S.
exports.
EXIM requests:
(1) Comments on the usefulness of such an option and need for EXIM
to extend its medium and long-term loans and guarantees to domestic
projects as described in the E.O. 14017 Report recommendation; and
(2) Feedback on the hypothetical parameters of such an EXIM program
as described in the ``supplementary information'' below.
DATES: Consideration will be given to all written comments received by
January 20, 2022.
ADDRESSES: Interested parties may submit comments on this transaction
electronically on <a href="http://www.regulations.gov">www.regulations.gov</a>. To submit a comment, enter
``Information Request on Potential Parameters of Export-Import Bank
Financing for Domestic Projects'' under the heading ``Enter Keyword or
ID'' and select Search. Follow the instructions provided at the Submit
a Comment screen. Please include your name, company name (if any) and
``Information Request on Potential Parameters of Export-Import Bank
Financing for Domestic Projects'' on any attached document. Comments
can also be sent by email or mail to Scott Condren,
<a href="/cdn-cgi/l/email-protection#1241717d66663c517d7c7660777c52776a7b7f3c757d64"><span class="__cf_email__" data-cfemail="bbe8d8d4cfcf95f8d4d5dfc9ded5fbdec3d2d695dcd4cd">[email protected]</span></a>, Export-Import Bank of the United States, 811
Vermont Ave. NW, Washington, DC 20571.
FOR FURTHER INFORMATION CONTACT: Scott Condren by telephone at 202-565-
3777 or by email at <a href="/cdn-cgi/l/email-protection#f2a1919d8686dcb19d9c9680979cb2978a9b9fdc959d84"><span class="__cf_email__" data-cfemail="b3e0d0dcc7c79df0dcddd7c1d6ddf3d6cbdade9dd4dcc5">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Background
On June 8th, 2021, the White House released a report
``Strengthening America's Supply Chains'' which recommended that
EXIM develop a proposal for Board consideration regarding
whether and how to implement a new Domestic Financing Program to
support the establishment and/or expansion of U.S. manufacturing
facilities and infrastructure projects in the United States that
would support U.S. exports. The proposal would support and
facilitate U.S. exports while rebuilding U.S. manufacturing capacity
This notice seeks comment on the value of expanding EXIM's foreign
buyer financing program to include domestic transactions, and feedback
on the hypothetical parameters such as described below. In general,
this notice only describes where transactions would face different
requirements or standards from EXIM's medium and long-term overseas
support. Terms, conditions, and requirements not addressed here, such
as additionality, should be presumed to be the same as EXIM's standard
export credit offering.
Hypothetical Parameters
Export Nexus: EXIM can only support transactions that have a nexus
to exports. Foreign ECAs tend to require as a standard (but not
rigorously applied minimum) 20% content for their export transactions.
Moreover, the British have created a domestic financing program for
companies that have an export ``basis'' that requires at least 5% of
annual revenues in any three-year period be from exports, or 20% in one
of any three years. EXIM may consider projects between a 25-50% export
nexus for support. For example, 25% of a project's production (e.g.,
goods produced at an EXIM-supported manufacturing facility) or capacity
(e.g., 25% of the traffic at a port) would need to be for export for
the transaction to eligible. This export connection could stretch back
through a supply chain and account for ``indirect exports''. For
example, if a company sells 50% of its output to a domestic company,
which in turn uses 50% of the supplier's inputs for exports, this
transaction would meet the 25% threshold.
Pricing: Because financing with no direct export component is not
considered official export financing, EXIM's financing would not be
subject to the Organisation for Economic Co-Operation and Development
(OECD) Arrangement terms and conditions. However, supporting domestic
transactions that facilitate exports must comply with both EXIM's
budget and World Trade Organization (WTO) rules. The former requires
transactional ``break even''; the latter which would require EXIM to
provide ``market'' pricing. EXIM may meet both tests via one of two
approaches:
(1) Direct Market Proxy: There are several options, including
lending on identical terms and conditions (or provide cover so that the
buyer faces identical all-in pricing on both covered and uncovered
tranches) as part of a syndicate, price using issuer specific credit
default swaps (CDS) or price using comparable public bond information.
(2) Implicit Market Benchmark: In cases where there is no direct
market benchmark (e.g., no debt of a comparable term exists), EXIM may
as a back-up utilize the OECD ``Through the Cycle Market Benchmark''
pricing methodology. This methodology uses commercial pricing
information to generate market reflective pricing for a wide range of
tenors and credit ratings.
Jobs supported: EXIM may connect to its jobs mission by scaling its
financing in relation to the number of U.S. jobs such financing would
support. For purposes of calculating maximum support, EXIM may include
the U.S. jobs involved in construction of the project and the U.S. jobs
involved in ongoing use of the project over the life of EXIM financing
(per year--e.g., 50 jobs per year for five years would be counted as
250 jobs). As all such jobs estimates are projections of the future,
EXIM may ask applicants to provide supporting information on why their
projections are accurate (e.g., similar projects had similar
employment, projections from their EPC when applicable), as well as
requesting that EXIM's independent consultants on projects may be asked
to opine on the reasonableness of the jobs projections. EXIM may choose
to use a lower jobs number than the applicant provided to determine
maximum financing.
U.S. flag shipping: EXIM may require U.S. flag shipping on major
discrete equipment imports specifically sourced for the project with
the same exceptions as EXIM's current policy. Items that had been
imported with no expectation or foreknowledge they would end up being
purchased with EXIM financing would not require U.S. flag shipping
(such items could also be termed ``Commercial off the shelf'').
Comments:
EXIM seeks comments on the eligibility criteria laid out above. In
addition, EXIM specifically asks
(1) Comments on the usefulness of such an option and need for EXIM
to extend its medium and long-term loans and guarantees to domestic
projects with an export connection as described in the E.O. 14017
report recommendation; and
[[Page 72968]]
(2) Feedback on the hypothetical parameters of such an EXIM program
as described in the ``supplementary information'' above.
Scott Condren,
Sr. Policy Analyst.
[FR Doc. 2021-27835 Filed 12-22-21; 8:45 am]
BILLING CODE 6690-01-P
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