Foreign financing is an attractive solution for Ukrainian companies willing to increase imports of commodities, capital goods and raw materials, expand their business or implement investment projects.

At present, Ukrainian companies experience difficulties in attracting external financing primarily due to limited access to long term financing and high interest rates of Ukrainian banks. Attraction of foreign capital could help companies to address their current financing needs. In these cases, IBcontacts offers different financial solutions, e.g.:

• export finance;
• project finance;
• structured finance.

As distinct from traditional lending schemes, the financial solutions like trade, project and structured finance with the coverage of export credit agency (ECA) have the following advantages:

• extended credit period (up to 12 years);
• attractive repayment schemes (including repayment holiday up to 2 years);
• simplified procedure;
• reduced period of decision making;
• collateral-free lending;
• low interest rates from foreign financing banks;
• direct financing by foreign bank (for large and financially strong corporations only);
• creating international credit history of a company.

Eligibility criteria:

• financial stability and creditworthiness of a borrower;
• positive credit history and payment behavior of a borrower;
• total value of import – at least 50% (foreign content up to 30% (base rate), up to 49% (combined deliveries) or over 49% (in exceptional cases);
• a downpayment – 15-30% of total contract value (it is possible to make  borrowing to finance the downpayment).

The overall cost of financing consists of the following:

• one-time premium/commission of the ECA – from 7% to 9%. The insurance premium limits may vary and depend directly on:
  – rating of the borrower’s host country (set by OECD);
  – loan amount and period;
  – risk level and creditworthiness of the borrower.
• bank interest on the loan in foreign financing bank – floating rate (EURIBOR, LIBOR etc.) + margin of the bank –  0.5-2% p.a.
• charges for project coordination, document preparation, transformation of financial statement, etc.

Chart 1. Financing International Transactions Through Supplier or Buyer Credit under  ECA coverage

IBcontacts provides comprehensive support and management of projects that include the following:

• developing structure of the project customized with a company’s needs (including complex deals with combined delivery and exceeding country or single transaction limits, extension of financing period);
• negotiating directly with the ECA and foreign financing bank;
• preparing all required project documentation;
• preparing financial statements according to IFRS;
• settlement of disputable matters (including legislative collisions);
• providing full legal support of transactions.