RISK MITIGATION: What are Updates & Proposals on Risk Mitigation Products?

Product Name Loan Guarantee
Link to Product Website
Provider Name OPIC (Overseas Private Investment Corporation) - USA
Product Definition OPIC provides financing either through direct loans, which are reserved for projects sponsored by or substantially involving U.S. small and medium enterprises (SMEs), or through loan guaranties, which are typically used for larger projects. OPIC can offer loans as small as $100,000, and can normally guaranty or lend up to $250 million per project; or up to $325 million in oil and gas projects.

All loans or guaranties over $30 million must be approved by the OPIC Board of Directors. The Board meets four times a year. OPIC works together with its clients to find a convenient schedule to meet all parties’ needs.

Under both financing techniques, the borrower approaches OPIC to analyze and structure financing for an overseas project, and OPIC determines the appropriate terms of borrowing. Where a guaranty is sought rather than a direct loan, a financial institution willing to provide the needed funds to OPIC is identified. Typical funding institutions include insurance companies, pension funds, and commercial banks, and under the guaranty, these lenders are protected by the full faith and credit of the United States government. OPIC, however, is the lender to the project.

The OPIC guaranty is simply an alternative funding mechanism, and only legal entities created under the laws of the U.S., any state or territory, or D.C., such as corporations, partnerships, or other associations including nonprofit associations more than 50 percent beneficially owned by U.S. citizens may be recipients of OPIC’s guaranty. Foreign corporations that are more than 95 percent U.S. owned are also eligible. OPIC-guarantied loans are classified as eligible U.S. government securities for insurance companies and many other institutional investors.

Commercial risks include, but are not limited to: the prices of inputs and outputs; new technologies; legal risk; financial risks such as interest rate and foreign exchange risk, liquidity management and capital structure decisions; production risk; market demand and general changes in the overall competitive situation.

Product Type Partial Credit Guarantee
Defined Risks Covered Comprehensive Risk
More on Risks Covered
Eligible Form of Investments Bonds
Bank Loans
Non-Bank Loans
Shareholder Loans
Eligible Currency of Underlying Investment Covered by this Product Both local and foreign currency
Eligible Countries & Regions All
More on Eligible Countries
Eligible Applicants PRIVATE: Companies headquartered in Risk Mitigation Provider Home Country
PRIVATE: Minimum Product or Service Content Requirement from Risk Mitigation Provider Home Country
More on Eligible Applicants
Eligible Sector No Specific Sector
Telecom: General
Wireline (Local Networks & Long Distance)
Wireless
Maximum Tenor 10+ to 15 years
Max. Absolute Amount (USD) 0 to 50 MM
Max. % of Project Costs Covered 75+% to 100%
More on Maximum Project Costs Covered
Max. % of Export Content Covered Max./under 50%
Fees Market-based
Loan guaranty fees are based on an underlying cost of capital (comparable to U.S. Treasury notes or other U.S. Government-guaranteed issues of similar maturity) plus a risk premium of between 2.0 percent and 6.0 percent, depending on OPIC’s assessment of the commercial and political risks involved; Consistent with commercial lending practices, upfront fees range from 1 percent to 2 percent, commitment fees and cancellation fees may be charged, and reimbursement is required for related out-of-pocket expenses, including fees for outside counsel and the services of experts or consultants.
More on Fees
Other Conditions Sovereign Counterguarantee: No
Anti-Corruption and Governance Standards: Yes link
Environmental standards: Yes link
Social standards (incl. Human Rights Standards; Labor Rights Standards): Yes link
Others:
Source(s) n.a.
For more information, contact
Information Officer, Office of External Affairs, OPIC (Overseas Private Investment Corporation)
1100 New York Avenue, NW
Washington, D.C. 20527
Email: info@opic.gov
Phone: (202) 336-8400
Attachments n.a.
Additional Links n.a.
Deals n.a.

Provider Name OPIC (Overseas Private Investment Corporation) - USA
Institution Type PUBLIC: Multilateral Development Bank
Ownership Government of the United States of America
Head Office 1100 New York Avenue, NW Washington, D.C. 20527
Provider Home Country United States
Rating n.a.
Main Risk Mitigation Products n.a.
Attachments n.a.
Additional Links www.opic.gov/publications/overview
Entered On: 07/11/2007 at 08:58 AM
Updated On: 02/10/2012 at 11:23 AM