Ex-Im Bank Financial Institution Buyer Credit Export Insurance
Financial institutions can reduce their risks on a short
term direct buyer credit loan or reimbursement loan made
to a foreign buyer for the financing of U.S. exports through
an Ex-Im Bank Financial Institution Buyer Credit Insurance
Policy (known as a FIBC or Bank Buyer Credit Policy).
A direct buyer credit loan is a loan extended to a foreign
entity by a financial institution for the importation
of U.S. manufactured or produced goods. A reimbursement
loan is the financial institution's reimbursement of a
buyer's payments to U.S. suppliers. In both cases, repayment
of the loan is based upon a buyer obligation to the financial
institution. This policy affords coverage against commercial
defaults and political events that result in nonpayment
under a buyer obligation.
What Is Covered
The policy provides coverage against political risks
such as war, revolution, expropriation or confiscation
by a government authority, cancellation of import or export
licenses after shipment and foreign exchange inconvertibility,
and commercial losses due to protracted default, insolvency
of the buyer or failure to reimburse for other reasons.
Devaluation is not covered.
The policy is issued in one of two policy formats: a
"documentary" policy for "buyer" credits,
and for certain "supplier" credits when the
supplier is a small business (see Ex-Im Bank's Short-Term
Credit Standards, EIB99-09 - Exporter Credit Criteria
for an Enhanced Assignment), and a "non-documentary"
policy for supplier credits when the supplier is not a
small business or otherwise does not meet the criteria.
The documentary format requires the financial institution
to obtain specific documents such as a signed buyer obligation,
transport document, invoice, and an Exporter Certificate,
EIB94-07. If the beneficiary of the funding is an entity
other than the supplier/exporter, a Beneficiary Certificate
, EIB92-37, is required. Under the documentary format,
having obtained documents that on their face satisfy the
policy requirements, the insured financial institution
can be assured that defects in the underlying commercial
transaction will not cause claim denial.
Under the documentary format, the principal risk assumed
is the uninsured retention, if any. Under the non-documentary
format, the financial institution remains at risk for
not only the uninsured retention but also certain events,
such as fraud in the transaction, non-shipment of products,
dispute in the transaction or the discovery of non-U.S.
Both policy formats offer equalized coverage for commercial
and political risks (comprehensive cover). Political-only
coverage is available under the documentary format. Maximum
percentages of cover are indicated:
Sovereign Obligors or Guarantors or political only coverage
Non-Sovereign Obligors or Guarantors including non-sovereign
public sector and private sector financial (non-letter
of credit) and non-financial institutions 90%
Approved agricultural Commodities 98%
Coverage applies to credit terms extended under a direct
loan or reimbursement agreement to a foreign buyer named
in the policy declarations for any goods produced in and
shipped from the United States during the policy period.
The maximum period between the date of shipment and the
date of the buyer obligation will generally be 45 days.
Cover is typically provided for credit terms up to 180
days for consumer items, spare parts and raw materials.
On a case-by-case basis, agricultural commodities, capital
equipment, and quasi-capital equipment may be insured
on terms up to 360 days. Products that are less than 50%
U.S. content exclusive of mark-up and certain defense
products are not eligible for cover. Principal amounts
are covered up to the maximum insured percentages stated
above or as specified in the policy declarations.
Documented interest is covered at the applicable rate
for the approved currency specified in the policy up to
a maximum of 180 days after the due date.
What Period Is Covered
The policy may be written for a period of up to 12 months.
The coverage effective date is the first date after which
a buyer obligation can be executed under this policy.
What the Insured Agrees
The insured agrees: