History of EXIM Support for Nuclear Transactions
The Export-Import Bank of the United States (EXIM) has provided financing for overseas nuclear transactions for over five decades and has world class expertise in analyzing technical, legal, and financial risks in the international nuclear sector. EXIM works closely with U.S. exporters who are at the cutting edge of nuclear technologies, including pressurized water reactors (PWRs), boiling water reactors (BWRs), small modular reactors (SMRs), and nuclear research reactors.
Nuclear Program Requirements
In the case of nuclear sector export credits, EXIM adheres to the OECD Arrangement on Officially Supported Export Credits (Arrangement) and the Arrangement’s Sector Understanding on Export Credits for Nuclear Power Plants. EXIM’s Make More in America Initiative (discussed below) is generally applied on terms that are also consistent with Arrangement requirements.
EXIM’s nuclear sector credits are also subject to compliance with the following:
- EXIM’s Environmental & Social Due Diligence Procedures and Guidelines (ESPGs)
- International Atomic Energy Agency (IAEA) safety standards and guides for regulatory regime, siting, design, construction, commissioning, and operations
- International Finance Corporation (IFC) Performance Standards
- Any relevant third country (exporter or host country) and internationally accepted safety and performance standards, and other U.S. government policy
EXIM also requires host governments to enter into the agreement required under Section 123 of the US Atomic Energy Act of 1954 (123 Agreements) and expects them to be parties to the Convention on Supplementary Compensation (CSC) and other applicable civil nuclear liability conventions as a condition for financing support.
EXIM Nuclear Sector Financing Products
All EXIM financing products are generally available for the nuclear sector, including each of the products described below, and subject in some cases to additional due diligence measures and other requirements specific to the nuclear sector context.
Letter of Interest and Preliminary Commitment
A Letter of Interest (LI) is a non-binding indication of EXIM’s general interest in a proposed transaction or project and provides indicative general financing terms that EXIM is prepared to consider based on a limited review of such a transaction/project.
A “standard” LI is a pre-export tool used to help strengthen a company's financing bid. It provides evidence of EXIM's preliminary understanding of the project, as well as its fundamental and overall risk profile.
In an “enhanced” LI, EXIM provides a more detailed letter indicating its willingness to consider financing the anticipated U.S. exports and identifies a loan officer who has the authority to underwrite the proposed transaction.
EXIM also provides Preliminary Commitments (PCs), which are non-binding preliminary offers of financing terms based on a credit evaluation and policy review and are approved by EXIM’s Board of Directors. PCs have stronger due diligence standards than required for LIs, but these standards are still less stringent than what is required to take any potential financing to final commitment.
Engineering Multiplier Program
EXIM’s Engineering Multiplier Program (EMP) provides direct loans or guarantees third party lender loans for pre-implementation stage technical services with respect to a foreign project. There is no set amount, though each EMP loan is designed to be folded into the long-term financing of the covered project if it proceeds with EXIM support.
Unless otherwise approved by EXIM’s Board of Directors, an EMP loan has a maximum five-year loan repayment tenor which could be rolled into any such longer-term loan (which can have a tenor of up to 22 years after construction and commissioning).
The EMP is designed to generate additional exports of U.S. goods and services overall (the "multiplier effect"), since the foreign buyer is more likely to procure U.S. equipment and construction services for a project for which U.S. engineers, designers, architects, and/or environmental analysts undertook the feasibility study, design, and other pre-project work.
The EMP can be used to finance feasibility studies, pre-construction design, engineering, architectural and environmental services undertaken prior to commencement of the implementation phase of a physical project. This supports the awarding of major equipment supply and construction contracts, and the development of technical and environmental and social information that are required to facilitate EXIM’s future consideration of requests to support the implementation of foreign projects.
Because support under the EMP is not associated with, and does not facilitate, activities related to project implementation, EXIM’s due diligence requirements are reduced significantly relative to project-based reviews.
Long-Term Export Credit Products (Buyer Financing)
In the nuclear sector, EXIM offers long-term buyer financing in the form of direct loans from EXIM and EXIM-guaranteed loans from third party lenders. These loans can have repayment terms of up to 22 years (after construction) for new build or modernization projects1. For loans relating to nuclear fuel loads the tenor is up to 4 years for initial loads or 2 years for subsequent reloads. Repayment terms on loans relating to spent fuel disposal have terms of up to 2 years and loans supporting spent-fuel management are for up to 5 years.
EXIM’s loans and loan guarantees are made in the form of:
- Sovereign financing based on the full faith and credit country risk of the relevant state.
- Corporate financing based on the borrowing capacity of a creditworthy borrower (non-sovereign public sector or private sector), as reflected on its balance sheet.
- Structured financing based on a borrower’s creditworthiness and other sources of collateral or security enhancements.
- Project financing based on project cash flows but with sovereign support for certain nuclear sector risk factors.
EXIM’s long-term buyer financings cover U.S. content (up to 85% of export contract), local costs (up to 40-50 percent of export contract), capitalized interest during construction, and, at the Borrower’s discretion, EXIM’s exposure fee. For EXIM-guaranteed loans the interest rate is set by the relevant guaranteed lender. For direct loans EXIM uses the CIRR (Commercial Interest Reference Rate). The applicable CIRR is based on the drawdown period, repayment period and repayment frequency of the project. The current CIRRs can be found on EXIM’s website at https://www.exim.gov/resources/commercial-interest-reference-rates.
Domestic Finance Products (U.S. Supplier Financing)
EXIM has four domestic finance programs, providing export credit insurance and loan support for working capital, supply chain needs, and export facilitation.
- Short & Medium-Term: Working Capital Guarantee (WCG), Supply Chain Finance Guarantee (SCFG) and Export Credit Insurance Products
- These products are generally analyzed independently of the potential long-term financing of nuclear sector projects.
- The Working Capital Guarantee supports U.S. businesses by making funds available that enable them to fulfill international sales orders. It turns business inventory and foreign accounts receivable into eligible collateral for the EXIM guaranteed lender.
- The Supply Chain Finance Guarantee assists U.S. suppliers of exporters through accounts receivable financing. The SCFG provides a guarantee to lenders and is designed to increase liquidity in the supply chain and provide suppliers, particularly small businesses, with access to capital faster and at a lower cost.
- EXIM’s Export Credit Insurance product allows U.S. businesses to extend credit to foreign buyers, protects against nonpayment, and improves cash flow. It minimizes political and commercial risks of buyer non-payment up to 95 percent and allows businesses to extend open account credit terms to customers of up to 360-days. It also increases borrowing capacity by enabling exporters to assign foreign receivables to a lender.
- Long-Term: Make More in America Initiative (MMIA) Product (Support to Domestic Manufacturing)
- EXIM’s Make More in America Initiative was developed in response to President Biden’s Executive Order 14017 on American Supply Chains. It provides financing to U.S. businesses looking to build out their capacity to manufacture exports.
- MMIA loans are designed to help revitalize American manufacturing, improve the resiliency of critical supply chains, and support U.S. jobs. Qualified applicants can now access EXIM financing for capital investment to establish or expand domestic manufacturing facilities or infrastructure projects that facilitate U.S. exports.
- Under the MMIA, financing is provided at market rates and scales according to the number of U.S. jobs supported by the proposed project, with each job-year unlocking up to nearly $190,000 in financing. All EXIM financing must supplement, and not compete with, private capital. To qualify for projects in the nuclear sector, domestic projects must be able to demonstrate that 25 percent of production or expected shipments are tied to exports.
EXIM actively participates in Team USA, which is a U.S. Government interagency effort to support civilian U.S. nuclear exports. Team USA is currently working to coordinate USG civil nuclear sector work in multiple countries including Romania, Poland, Brazil, and India.
1The exception to this is in the case of a modernization where either (a) the overall value of the modernization is under SDR 80 million or (b) the economic life of the plant is likely to be extended by less than the repayment period. In such cases, the maximum repayment is 15 years.