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Ex-Im Bank Loan 'Take-out' Option to Reduce Banks' Liquidity Risks, Enhance U.S. Export Competitiveness


Media Contact Name/Phone: 

Marianna Ohe (202-565-3206)

Editor's Note added October 4, 2011: The take-out option discussed in the following news release is currently under review and not available.

WASHINGTON, D.C. - Commercial banks now can reduce their liquidity risks and help make U.S. exports more competitive by selling their Export-Import Bank of the United States (Ex-Im Bank)-guaranteed medium- and long-term loans back to Ex-Im Bank.

The Ex-Im Bank 'take-out' option will enable banks to offer much more competitive financing terms to their borrowers who wish to buy U.S. exports, said John A. McAdams, Ex-Im Bank senior vice president - Export Finance.

By purchasing the take-out option liquidity insurance, banks will be able to sell the guaranteed loans to Ex-Im Bank at par if there are significant changes in their credit spreads and funding costs, or in the overall market.

Since the onset of the financial crisis, many banks that have frequently used Ex-Im Bank products have experienced increased funding and liquidity costs for trade finance transactions, resulting in higher pricing and causing many borrowers to turn, instead, to Ex-Im Bank's direct loan program.

We do not want the rise in direct loan requests to cause commercial banks to stop offering Ex-Im Bank's products in conjunction with their financing, McAdams said. While Ex-Im Bank direct loans have always been available, we want to maintain commercial bank participation in our programs. The banks are an important source of origination and administration of our transactions.

If a guaranteed lender exercises the take-out option, Ex-Im Bank will buy, and the guaranteed lender will transfer to Ex-Im Bank, any loans covered by a take-out option and all related transaction documents in exchange for payment of the loan purchase price. Ex-Im Bank will charge a modest annual fee to the lender for this option, and an additional fee if the option is exercised. The option is available for all new dollar-denominated, floating rate, medium- and long-term Ex-Im Bank-guaranteed loans.

Ex-Im Bank is the official export-credit agency of the United States. The independent, self-sustaining federal agency, now in its 75th year, helps create and maintain U.S. jobs by financing the sale of U.S. exports, primarily to emerging markets throughout the world, by providing loan guarantees, export-credit insurance and direct loans. In fiscal year 2008, Ex-Im Bank authorized $14.4 billion in financing to support an estimated $19.6 billion of U.S. exports worldwide.