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EXIM Board Votes to Reform and Renew EXIM’s Public-Private Partnership with the Private Export Funding Corporation Following Comprehensive Public Review

Renewed Partnership Enhances U.S. Competitiveness with China, Supports U.S. Exporters, Benefits U.S. Small Businesses, and Keeps America Strong


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WASHINGTON – To further support American businesses, workers, and exports, the Export-Import Bank of the United States (EXIM) Board of Directors yesterday unanimously voted to renew its partnership with the Private Export Funding Corporation (PEFCO) for 25 years, which equals the maximum combined term of an EXIM-authorized long-term transaction. As part of this renewed partnership, the EXIM Board of Directors approved seven key reforms to the EXIM-PEFCO partnership that will be implemented through the Standard Operating Procedures (SOPs) that guide the partnership.

The reforms are as follows:

  1. Require Regular Reviews of PEFCO:
    • Every time the SOPs are renewed (typically every two or three years), a third-party will conduct a study and EXIM will request that the EXIM Inspector General evaluate PEFCO and make recommendations to EXIM regarding the partnership. The EXIM Board of Directors will evaluate these recommendations to modify the SOPs, evaluate the usefulness and appropriateness of PEFCO, and determine whether EXIM should continue the partnership.
  2. Enhance PEFCO’s Reporting to EXIM:
    • Require PEFCO to provide numerous reports on various topics including its annual activity towards each of EXIM’s mandates and an annual analysis of the mitigants and protections that PEFCO has in place for EXIM’s exposure to PEFCO. Additionally, PEFCO will be required to contribute information to an EXIM report on market gaps for small business exporters and potential market-based solutions, as well as harmonize its small business definition with EXIM’s definition in order to better support U.S. small businesses.
  3. Lower PEFCO’s Dividend Cap:
    • Under the new SOPs, PEFCO’s dividend cap is reduced from 50 percent to 35 percent of earnings, to ensure PEFCO’s long-run capital position will be prioritized over short-term stockholder gains.
  4. Further U.S. Competitiveness with China:
    • Adds EXIM’s new Congressional mandates on China and Transformational Exports to PEFCO’s organizational goals, encouraging the role of private capital in this strategic effort, one of the most important mandates in EXIM’s 86-year history.
  5. Restrict PEFCO Activity with China:
    • Consistent with Section 408 of EXIM’s 2019 reauthorization, restricting PEFCO’s support of EXIM-guaranteed transactions over $25 million in which the government of China is the end user, lender, or obligor.
  6. Encourage Small Business Support:
    • Adds credit unions to PEFCO’s list of eligible lenders, encouraging PEFCO’s funding of small businesses across the country.
  7. Protect the Taxpayer:
    • With this board action, EXIM approved PEFCO’s Collateralized Notes program (which does not receive EXIM’s guarantee on interest) as an ongoing authority, allowing for more tailored use of the Secured Notes program (which does receive EXIM’s guarantee on interest) and potentially limiting EXIM’s exposure to PEFCO in the future.

PEFCO was created in 1970 with input from EXIM the U.S. Department of the Treasury, U.S. Department of Commerce, U.S. Department of Justice, and the Federal Reserve Board of Governors to finance U.S. exports by complementing the financing available from commercial banks and other lenders. PEFCO provides a broad range of export finance programs as a direct lender and as a secondary market buyer of export loans originated by other lenders.

When the term of the EXIM-PEFCO partnership was first conceived in 1970, a 25-year term was agreed to because it enabled PEFCO to take on any long-term deal EXIM could approve for the duration of the combined term of the disbursement and repayment periods. At that time, the longest authorizations EXIM could enter into were for nuclear power projects, which had a combined term of nearly 25 years.

“A 25-year renewal of the Guarantee and Credit Agreement correlates with some of the longest transactions that EXIM can authorize – those with 18-year repayment terms and seven years of disbursement, resulting in 25-year deals. These transactions fall under sectors such as nuclear power and renewable energy, among others. In order to have PEFCO contribute to EXIM’s effort to counter China, whose programs can include 25-year terms, the market needs confidence that PEFCO will be able to fund these types of very long-term deals,” said Jim Cruse, Senior Vice President, EXIM’s Office of Policy Analysis and International Relations.

“President Trump and the U.S. Congress have spoken loud and clear on the value of EXIM, and the EXIM-PEFCO partnership complements EXIM’s Congressional mandates by increasing U.S. competitiveness, including when it comes to countering China, assisting U.S. small businesses, and supporting exports to sub-Saharan Africa,” said EXIM President and Chairman Kimberly A. Reed. “Yesterday’s vote to continue this partnership with reforms will assist us in achieving those goals and work towards EXIM’s vision of keeping America strong. I’d like to highlight and voice my appreciation for Director Bachus’ commitment to strong oversight, which directly led to our unanimous approval of a routine review cycle of PEFCO going forward. In 2023, the EXIM Board of Directors will request comments from both an independent third party and the Inspector General, on the EXIM-PEFCO partnership and can choose to re-evaluate the terms of the agreement then or at any time thereafter,” Chairman Reed added.

“Today, perhaps more than ever, PEFCO plays an important role in the global economy, as we look to level the playing field for U.S. exporters. At the same time, I am steadfast in my belief that EXIM must play a responsible role in reviewing this relationship on a regular basis, with a sufficient level of detail. With this change we will holistically evaluate PEFCO before each renewal of the Standard Operating Procedures (SOPs). The SOPs are typically renewed, with EXIM Board approval required, every two or three years,” said EXIM Board Member Spencer T. Bachus, III. “As Chairman Reed stated, the Board will now consider the renewal of the SOPs before the end of fiscal year 2023. At that time EXIM may, unilaterally, halt any new business with PEFCO, whether it is through new EXIM-guaranteed transactions or new issuances of secured notes. Thus, this vote strikes a balance between the needs of our exporters today, with our responsibility to protect taxpayers into the future. Additionally, we solicited opinions from the National Advisory Council on International Monetary and Financial Policies, which is Chaired by the U.S. Department of Treasury, and members of Congress on renewal with PEFCO, but we received no comments or concerns on EXIM’s relationship with PEFCO.”

“Yesterday’s votes build on 50 years of a successful public-private partnership and will provide long-term certainty to the markets, business community, and foreign buyers,” said EXIM Board Member Judith D. Pryor. “We also enacted important modifications designed to ensure PEFCO continues to fulfill EXIM’s mission of supporting American jobs through exports.”

“The renewal of the EXIM-PEFCO partnership is welcome news for exporters of all sizes across the country, as they seek to compete against the unfair subsidies from the Chinese Communist Party,” said EXIM Advisory Committee Chairman and former Member of Congress Stevan Pearce. “U.S. exporters will continue to have access to the private capital markets through this arrangement. These types of public-private partnerships are a win for businesses and, most importantly, for U.S. jobs.”

“I applaud EXIM’s Board of Directors for their work in enacting important reforms as part of this continued partnership between EXIM and PEFCO - which will help U.S. exporters compete now and into the future,” said Lawrence Goodman, member, EXIM Advisory Committee and president, Center for Financial Stability. “Increased transparency and oversight are essential to protect the U.S. taxpayer, while reforms aimed at limiting PEFCO’s activity with China are timely.”

Former Speaker Newt Gingrich’s recent op-ed published in The Hill on August 4, 2020: “For U.S. exporters to compete with China for contracts in places such as Africa and Latin America, EXIM needs PEFCO to be operational to maximize its impact and leverage the private sector.”

At the start of the EXIM Board meeting, EXIM Senior Advisor to the President and Chairman Lauren L. Fuller outlined the comprehensive PEFCO review process that was undertaken at the direction of Chairman Reed. “Staff believes this process Chairman Reed directed fully reflects her commitment to following the law, upholding EXIM’s congressional mandates, not competing with the private sector, increasing transparency and accountability, and strengthening American taxpayer protections, as well as reinforces her commitment to reform EXIM,” said Fuller. Fuller’s presentation outlining each step taken as part of the review process can be accessed here.

On July 27, 2020, EXIM Chairman Reed announced the agency’s first-ever public review of the 50-year EXIM-PEFCO Partnership. As part of the review, EXIM invited public comment on two separate requests the agency has received from PEFCO.

  • The first request for public comment related to renewing PEFCO’s partnership with EXIM, which is set to expire on December 31, 2020.
    • To see the comments related to the first request, click HERE.
  • The second request for public comment related to increasing the amount of the long-term general guarantee on the interest of Secured Notes issued by PEFCO.
    • To see the comments related to the second request, click HERE.
  • The two requests were published in the Federal Register and the public comment period closed on August 21, 2020.

As part of this open and transparent process, several groups echoed their support for extending the EXIM-PEFCO partnerships while noting that small and medium-sized exporters would be placed at a disadvantage should the relationship lapse. In its letter of support, the U.S. Chamber of Commerce stated, “Without the EXIM-PEFCO partnership, U.S. small and medium-sized exporters would be placed in a disadvantageous situation. In today’s highly competitive global markets, buyers overseas increasingly expect vendors to offer financing, and PEFCO – operating in partnership with EXIM – fills in this gap in a way that other entities simply do not.”

The National Association of Manufacturers also echoed support for the EXIM-PEFCO Partnership, “The Ex-Im Bank’s relationship with PEFCO benefits manufacturers who export by providing private export financing options beyond government lending, increasing competitiveness and supporting small and medium-sized manufacturing exporters. … Manufacturers believe that the Export-Import Bank’s relationship with PEFCO is an illustration of a successful public-private partnership that ensures a well-functioning export credit market.”

The Bankers Association for Finance and Trade added, “The absence of PEFCO would have a particularly detrimental effect on the ability of small-and medium-sized (SME) exporters to access EXIM financing. Many of these SMEs rely on smaller, regional relationship banks that also have term funding constraints.”

To further provide an opportunity for interested stakeholders to express their views, EXIM’s Board of Directors held an open, public meeting as part of its review of PEFCO on August 13, 2020.

PEFCO entered into an official 25-year partnership with EXIM in 1971, which was renewed in 1994 for another 25-year period through December 31, 2020. The partnership was established with the support of EXIM and the broader U.S. government to mobilize private capital for the funding of EXIM guarantees and/or insurance authorized in support of U.S. exports to complement and fill gaps in funding available from commercial sources. PEFCO accomplishes these purposes by intermediating between the efficiency and immense scale of the U.S. capital markets and the day-to-day funding needs of export financing for cases ranging from several hundred thousand dollars to several hundred million dollars.

EXIM Small Business Outreach and Relief Efforts

During the meeting, the EXIM Board also received an update from EXIM’s Office of Small Business. James G. Burrows, Jr., Senior Vice President of Small Business, noted that despite the challenges posed by COVID-19, EXIM remains open and operational and is committed to supporting U.S. jobs through exports.

Mr. Burrows highlighted that since a Board quorum was restored in May 2019, EXIM has authorized roughly 2,069 small business transactions totaling $2.7 billion, supporting American jobs throughout the United States. “The Office of Small Business has three operating objectives. First, to ensure that our products meet our client’s needs. Second, we’re continually looking for ways to find new clients, including finding better data sources, leveraging our multiplier networks and using the latest technology and social media platforms to enhance outreach and education to exporters, lenders, insurance brokers and other EXIM multiplier networks. Third, we continue to enhance our transactional experience for our customers to enrich the overall experience and increase the ease of doing business,” said Jim Burrows.


EXIM is an independent federal agency that promotes and supports American jobs by providing competitive and necessary export credit to support sales of U.S. goods and services to international buyers. A robust EXIM can level the global playing field for U.S. exporters when they compete against foreign companies that receive support from their governments. EXIM also contributes to U.S. economic growth by helping to create and sustain hundreds of thousands of jobs in exporting businesses and their supply chains across the United States. In recent years, approximately 90 percent of the total number of the agency’s authorizations has directly supported small businesses. Since 1992, EXIM has generated more than $9 billion for the U.S. Treasury for repayment of U.S. debt.

For more information about EXIM, please visit www.exim.gov