The financing and the methods of civil engineering construction projects and engineering structures are the sine qua non of their feasibility. MATIERE® is able to assist its clients with the most appropriate financing for your engineering structure projects abroad.
Several types of medium-term export financing can be offered, including buyer credit and state-to-state loans (Treasury loan).
MATIERE® having production units in France and Belgium (MBB), these financing arrangements, which follow the rules laid down by the OECD Arrangement, are set up thanks to the support of the French and/or Belgian Authorities (depending on the production site selected) and its banking partners. Thus, as soon as its commercial offer is submitted, MATIERE® is able to propose the most appropriate financing solution according to the project.
Financing of a civil engineering structure by buyer’s credit
Buyer credit is a bank loan directly granted by a bank to the borrower, which may be either the foreign buyer, its bank or a counterpart acting on its behalf (Ministry of Finance, Central Bank, …) to finance an export contract by allowing the supplier to be paid in cash.
The characteristics of buyer credit in the context of a civil engineering structure :
- The OECD Arrangement provides for the payment by the buyer of 15% down-payments of which a minimum of 5% at the time of the order, the financing will cover a maximum of 85% of the amount of the eligible part of the contract, i.e. 85% of the exported part (repatriable part) plus local expenses incurred under the responsibility of MATIERE®, up to a limit of 30% of the exported part.
- The credit repayment period: from 3 to 10 years, is determined on a case-by-case basis by the Credit Insurer (BPI France Assurance Export or Credendo).
- The credit rate will be, at the Borrower’s choice, either variable semi-annually or fixed for the entire duration of the credit.
- The lending bank benefits from credit insurance provided by BPI France Assurance Export (for France) or Credendo (for Belgium). The credit insurance premium, payable by the borrower, can be financed by increasing the buyer’s credit.
- The exporter (MATIERE®) is paid in cash as and when the services are provided.
- The starting point for credit repayment is set at the end of the construction period of the work; this represents for the borrower a grace period equal to the construction period.
- Bank commissions (arrangement, commitment, management, agent…) are negotiated on a case-by-case basis between the lending bank and the borrower.
It should be noted that, subject to the agreement of the lending bank(s), the down payments can possibly be financed within the framework of a commercial credit.
Main advantages of buyer credit :
- For the Borrower / Buyer :
- Generally the conditions are more attractive than those practiced by local banks (rate, duration).
- In case of fixed rate, no interest rate risk
- No repayment of principal during the execution of the contract
- For the exporter :
- Guaranteed cash payment so no risk of non-payment
- No impact on the balance sheet
- Competitive advantage with a long-term financing offer
- For the bank :
- Credit guaranteed at 95% by the credit insurer
- Exposure to residual risk only
- Lesser allocation in terms of equity
Remark : As the implementation of a buyer credit financing is relatively long, MATIERE® wishes to know from the first contacts with its potential buyers their needs in terms of financing. MATIERE® will be able to have contacts very early on with the French or Belgian Authorities, the Credit Insurer concerned and the banks, and will thus be able to submit an indicative financing proposal to accompany its commercial offer.
The example of Senegal
The Government of Senegal, through the Ministry of Infrastructure, Land Transport and Opening-up, has embarked on an ambitious program to build 18 bridges and flyovers, including 13 in the Senegalese capital. A global financing estimated at 150 billion FCFA (230 million euros) has been put in place by a consortium of French banks in favor of the Republic of Senegal represented by the Ministry of Economy, Finance and Planning. The financing offered to the buyer, with the “support” of the French Authorities, was an essential asset for the supplier. Senegal was thus able to benefit from long-term financing covering 100% of this important project.
Financing of an engineering structure with the Treasury loan
It is a loan between the French or Belgian State and a foreign State to finance an infrastructure or service project, with a strong French or Belgian component, as the case may be.
An intergovernmental agreement (IGA) is negotiated between France or Belgium and the third country to set the conditions for repayment of the loan. The financing is paid directly to the company carrying out the service, as the project progresses. The foreign State reimburses the loan according to the negotiated terms.
If we take the example of France, the French State offers two types of loans: the concessional loan and the direct loan.
Characteristics of the concessional loan
The concessional loan is a loan on very favorable financial terms that contributes to France’s development aid policy.
- Type of project financed: Unprofitable project.
- Amount : 10 million to 70 million euros.
- Recipients: All types of companies.
- Eligible countries: Around 30 countries on the list of eligible countries.
- Portion of project financed by the loan: Up to 100%.
- Conditions for the French share: The share of the added value produced in France must exceed 70%.
- Financial conditions: The loan includes 35% grant equivalent.
Characteristics of the direct loan in the framework of the realization of a civil engineering structure
The direct loan is a non-concessional loan intended to finance export projects on conditions close to those of the market.
- Type of project financed: any profitable or unprofitable project.
- Amount : More than 10 million euros.
- Beneficiaries: All types of companies.
- Eligible countries: Countries on the list of eligible countries.
- Portion of the project financed by the loan: Up to 85% of the amount of the export contract, with the remainder to be financed by the beneficiary state.
- Conditions for French share: The share of the added value produced in France must exceed 50%.
- Financial conditions: Average loan term of 10 years, at a fixed rate (rate set monthly by the OECD plus a country risk premium and 0.5% commission).
Services and strategic advice for the construction of engineering structures
To help you evaluate your financing options, MATIERE® offers its support, ranging from project feasibility studies to financing advice, from financial planning to project completion. In close collaboration with privileged partners such as French and Belgian Authorities, banks, Credit Insurers (BPI France Assurance Export and Credendo), the MATIERE® approach emphasizes precision, transparency and flexibility. The company will assist you throughout the financing process to enable you to fully assess the risks and prospects for an informed decision.
Preliminary analysis of financial capacity, complete feasibility analysis, assistance in obtaining project financing… Take advantage of MATIERE®’s expertise and know-how for the financing of your engineering structures.