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Financing Structures |
OPIC offers three basic finance products: 1) Direct Loans, 2) Investment Guaranties Funded by OPIC Certificates of Participation and 3) Investment Guaranties to Third Party Lenders. The application process is the same for all products. After you apply, the OPIC loan officer who reviews your application could assist you in determining which product may be the appropriate option for your project.
Direct Loans:
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Only projects that include the significant involvement of a U.S. small business are eligible to obtain this product.
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OPIC lends directly to an eligible borrower. The loan agreement and the promissory note are between OPIC and the borrower.
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OPIC’s source of funding for these transactions is the U.S. Treasury. The interest rate is a fixed rate based on the cost of U.S. Treasury obligations with a similar tenor at the time of disbursement plus a risk premium.
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OPIC disburses the funds for these transactions directly, invoices the borrowers directly and receives all principal and interest payments directly.
Investment Guaranties Funded by OPIC Certificates of Participation:
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Projects that benefit from meaningful contributions by any size U.S. participant are eligible for this product.
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OPIC lends directly to an eligible borrower. The loan agreement and the promissory note are between OPIC and the borrower.
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To fund these transactions, OPIC issues Certificates of Participation (“COPs”) in the U.S. debt capital markets. COP holders are guaranteed payment by the full faith and credit of the U.S. Government.
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The term of the COPs matches that of the loan agreement and promissory note between OPIC and the borrower, and the borrower makes payment to the COP holder through a Paying Agent. If the borrower were to make insufficient payment to service the COPs, OPIC would pay the COP-holders under its guaranty.
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OPIC’s base interest rate may be either a fixed or floating rate based on various U.S. Treasury securities, or in some instances, may be a LIBOR-based floating rate. OPIC adds a risk premium called a Guaranty Fee to the base rate.
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OPIC does not disburse or receive funds or invoice these borrowers directly. The borrower pays for the services of: 1) a Placement Agent that prices and sells the COPs to institutional investors and wires the OPIC loan proceeds to the borrower, and, 2) a Paying Agent that prepares various supporting calculations and manages invoicing, payment of principal and interest to COP-holders, and payment of the Guaranty Fee to OPIC.
Investment Guaranties to Third Party Lenders:
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Projects that benefit from meaningful contributions by any size U.S. participant are eligible for this product.
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A Third Party Lender (“TPL”) that is an Eligible Investor (see definition below) lends directly to an eligible borrower.
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OPIC provides a guaranty to the TPL such that if a borrower fails to make payments on their loan from the TPL, then the TPL may make a claim to OPIC for payment.
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The base interest rate (usually a LIBOR-based rate) and any administrative spread are negotiated between the TPL and the Borrower. OPIC adds a risk premium called a Guaranty Fee to the base rate.
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The TPL handles administration of the loan and forwards the Guaranty Fees to OPIC on a periodic basis.
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