May 6, 2020
Background
The EXIM Supply Chain Finance Guarantee Program was established in 2010 but has been seldom utilized in recent years. Due to the COVID-19 pandemic, EXIM has seen renewed interest in the program from many lenders. Lenders have also communicated that the pricing structure which was previously based on the 12-month daily average CDS rate of the borrower, was not going to be feasible for most transactions. In response, EXIM has developed a new pricing structure and has also temporarily provided for an increased guarantee to 95%.
New Pricing Structure
Fees for the Supply Chain Finance Guarantee Program are based on utilization and are due and payable by the purchaser in arrears for the prior month's guaranteed receivables. Fees are due by the 15th business day following the last day of the prior month. Reference Article I, definition of Guarantee Fee of the Exporter Supply Chain Finance Guarantee Program Master Guarantee Agreement for details on fee calculation.
The fee is determined based on the credit rating of the borrower. For non-rated borrowers, the lender will need to provide pricing benchmarks from the private insurance market.
| Supply Chain Finance Guarantee Fee at 90% Coverage | ||||||||
|---|---|---|---|---|---|---|---|---|
| S&P, Fitch | AA+,AA,AA- | A+,A,A- | BBB+,BBB | BBB- | BB+,BB | BB- | B+,B | B- |
| Moody's | Aa1,Aa2 | A1,A2,A3 | Baa1,Baa2 | Baa3 | Ba1,Ba2 | Ba3 | B1,B2 | B3 |
| Guarantee Fee | 0.75% | 0.75% | 0.75% | 0.75% | 0.75% | 1.00% | 1.25% | 1.50% |
| Supply Chain Finance Guarantee Fee at 95% Coverage | ||||||||
| S&P, Fitch | AA+,AA,AA- | A+,A,A- | BBB+,BBB | BBB- | BB+,BB | BB- | B+,B | B- |
| Moody's | Aa1,Aa2 | A1,A2,A3 | Baa1,Baa2 | Baa3 | Ba1,Ba2 | Ba3 | B1,B2 | B3 |
| Guarantee Fee | 2.06% | 2.06% | 2.06% | 2.06% | 2.06% | 2.31% | 2.56% | 2.81% |
95% coverage is available for new facilities with an effective date on or before May 1, 2021 and will have a maximum term of 1 year as this coverage is part of temporary COVID-19 relief measures.