Perspectives 2019 2020 Public Sector

60 New Trends in Official Agency-Backed Financings for Public Sector Borrowers Export credit agencies are increasingly aware of this trend and would like to support their SME exporters in particular, which have relatively limited access to international markets, by linking them with EPC contractors and relaxing their content definitions to provide financing support. We have recently seen UK Export Finance successfully organize supplier fairs that invite British manufacturers from a specific sector to increase UK export content in the supply chain of a specific project. These kinds of efforts directly connect exporters to EPC contractors or project sponsors, augmenting the supply chain offering from a single country in a specific project, and allowing that country’s ECA to offer their guarantee for the financing of a larger portion of the project cost. Export Development Canada and Italy’s SACE have also embraced this trend with their “pull” and “push” strategies, offering financing incentives to international companies to increase trade with their exporters and broaden their supply chain to include Canadian/Italian products. Similarly, Danish ECA EKF has introduced “shopping line” credit for strategic buyers to finance purchases from Danish companies, while Swedish export credit agencies EKN and SEK have joined forces with the Swedish aid agency Swedfund to help Swedish exporters connect with EPC contractors to increase Swedish sourcing in large infrastructure projects globally. Export-Import Bank of Korea has followed suit with its recent announcement that it is devising a similar financing product to EDC’s and SACE’s pull/push program financings, which are not usually tied to a single contract financing. Citi has excellent links to ECAs and EPC contractors alike and supports efforts to help public sector borrowers maximize their access to ECA-backed financing to achieve optimal terms for the financing of landmark sovereign development projects across the world. Framework Borrowing Solutions Various governments’ debt management offices face the challenge of ensuring attractive financing terms for a multitude of projects undertaken simultaneously. This results in multiple work streams for public institutions to tender, execute and monitor a series of financings for projects in sectors ranging from transport to healthcare, infrastructure to power. A good solution for debt management offices or ministries of finance could be to streamline these financings using framework debt structures. These structures can be in the form of a common terms agreement for greater efficiency in loan documentation negotiations or a series of loan agreements, replicable in structure, to finance projects sourced from different countries, each benefiting from a different ECA’s support. Another new trend is for sovereign borrowers to use the services of advisor financial institutions or third-party procurement consultants to analyze the content and sourcing of large-scale projects to help governments identify financing options that could be relevant and choose the most efficient solution. Any public sector entity with a large pipeline of projects or that regularly taps the ECA financing market would be a good candidate to consider framework financing solutions. It is now common for Middle Eastern public institutions to use this method to tap support of multiple ECAs simultaneously. A number of African governments have also established framework facilities or credit lines to efficiently borrow from financial institutions with official agency support. Citi is a market leader in establishing framework financing solutions for public sector clients and has implemented them for a number of public sector borrowers, especially for projects in oil and gas or infrastructure sectors. Georgi Yordanov Head of Public Sector CEE, Turkey & Israel, Citi Nazli Edgu EMEA Export & Agency Finance, Citi