How To Use
The following is an introduction to PEFCO and its programs. For details on specific PEFCO facilities, please see Programs.
PEFCO was incorporated on April 9, 1970 under Delaware law and is principally engaged in making U.S. dollar loans to foreign importers to finance purchases of goods and services of United States manufacture or origin. PEFCO's shareowners include most of the major commercial banks involved in financing U.S. exports, industrial companies involved in exporting U.S. products and services, and financial services companies.
PEFCO was established with the support of the United States Department of the Treasury and the Export-Import Bank of the United States ("Ex-Im Bank") to assist in the financing of U.S. exports through the mobilization of private capital as a supplement to the financing already available through Ex-Im Bank, commercial banks, and other lending institutions. Ex-Im Bank has cooperated in the operation of PEFCO through various agreements described under "PEFCO's Relationship with Ex-Im Bank" and in the "Notes to the Consolidated Financial Statements" (see the current Annual Report).
PEFCO's Lending Programs
Long-Term Loan Program
PEFCO will commit to finance U.S. exports under long-term Ex-Im Bank guarantees, by either making loans directly to borrowers (Primary Loan Activity) or by buying loans made by other lenders (Secondary Loan Activity).
The interest rates at which PEFCO is willing to lend to borrowers (or the price at which PEFCO is willing to buy loans from lenders) is based on PEFCO’s estimated cost of funds at the time the loan is to be made (or purchased), taking into account the disbursement and repayment characteristics of the loan. PEFCO's estimated cost of funds is usually based on the U.S. Treasury yield for a maturity similar to the average life of the loan being funded, to which is added the premium required to place PEFCO's Secured Notes, warehousing and hedging costs, if any, and a modest margin for expenses, risk, and return to shareowners. PEFCO also charges commitment fees calculated on the committed, undisbursed, and uncancelled amount of its loan commitments.
Short- and Medium-Term Program
The Short- and Medium-Term Program is primarily a secondary market activity where PEFCO purchases loans or leases originated by Lenders or Lessors. To be eligible for purchase by PEFCO, the repayment of the loan or lease must be covered by a comprehensive (i.e., covering all political and commercial risks) guarantee issued by Ex-Im Bank.
Participating Lenders and Lessors must demonstrate an understanding of and experience with Ex-Im Bank programs and policies, and evidence sufficient financial strength and stability to indemnify PEFCO should they loose the benefit of Ex-Im Bank’s cover.
PEFCO charges interest on the amount it purchases and, in some cases, a commitment fee. The Lender or Lessor retains any interest and fees above those charged by PEFCO.
In order to help Ex-Im Bank reach a greater segment of small businesses, PEFCO offers the Small Business Initiative, a collection of special services and programs designed to help small business exporters access competitive and reliable export finance.
Short-term loans have scheduled maturities of one year or shorter. They typically finance exports of consumer goods, bulk agricultural products, and small capital goods.
Short-Term Working Capital Loans
PEFCO purchases participations in loans guaranteed under the Ex-Im Bank Working Capital Guarantee Program. PEFCO charges interest on its participation. The Lender retains any difference between the interest charged to the Borrower and PEFCO’s interest. US Prime-based and LIBOR-based interest rates are available.
The Lender continues to service the loan and maintain the guarantee.
Medium-term loans have scheduled repayments of between 2 to 7 years with financed amounts up to $10 million. Extended repayment terms of up 18 years are available for certain environmentally beneficial exports. They typically finance the export of capital goods.
The Guaranteed Note Facility
This is PEFCO’s program for purchases of medium-term guaranteed Notes (see PEFCO Programs for a fuller description). Generally, the Lender has the responsibility to maintain the Ex-Im Bank guarantee, including filing a timely claim, and billing the borrower for periodic installments. However, for a fee PEFCO will assume the billing function. The Lender receives its interest spread over the life of the loan.
The Discount Facility is a variation on the Guaranteed Note Facility that is available for fixed rate Notes only. Under the Discount Facility, the Lender fixes its interest rate with PEFCO prior to loan disbursement. The Lender’s interest spread is discounted and paid up front rather than over the life of the loan. PEFCO must assume the Lender’s obligations to maintain the guarantee, bill and collect installments, and, if necessary, file claims under the guarantee.
The Guaranteed Lease Facility
This is PEFCO’s program for purchases of medium-term guaranteed Leases (see PEFCO Programs for a fuller description). Generally, the Lessor has the responsibility to maintain the Ex-Im Bank guarantee, including filing a timely claim, and for billing lessee for periodic rent payments. However, for a fee PEFCO will assume the billing function. The Lessor receives its interest spread over the life of the Lease.