Korea Eximbank (www.koreaexim.go.kr, Chairman Kim Yong-hwan, “Korea Eximbank”) announced on August 27 that it provided a combined USD 174 Million in direct loan* and comprehensive guarantee** to CSAV***, the largest container shipping company in Latin America, which ordered ships from Samsung Heavy Industries.

* Direct Loan: long-term loan provided by Korea Eximbank to foreign buyers to finance their purchase of Korean products.
** Comprehensive Guarantee: financial instrument designed to get commercial banks to participate in lending to a foreign buyer by guaranteeing the buyer’s repayment.
*** The world’s 20th largest container shipping company which commands a huge customer base through strategic alliances with shipping giants such as MSC (world’s 2nd largest) and CMA CGM (3rd largest). A subsidiary of Chile’s Luksic Group.

CSAV’s agreement to purchase seven 9300TEU container vessels from Samsung Heavy Industries, signed in April this year, came after several visits by the shipping company to Korea Eximbank since July 2012 to confirm the latter’s willingness to finance the deal.

Korea Eximbank, for its part, issued an L/I* in August 2012 and then again in March 2013 to make sure Samsung Heavy Industries wins the order from CSAV.

* L/I (Letter of Intent): a letter conveying Korea Eximbank’s willingness to finance a deal on condition that the contract is awarded to a Korean company.

Korea Eximbank explained that its direct loan and guarantee, coupled with K-Sure’s insurance, played a crucial role in the awarding of the contract to a Korean shipbuilder at a time when global shipowners are struggling to secure funding for new ship purchases in the absence of easy credit formerly supplied by European banks.

A Korea Eximbank official noted, “In order to fill the void left by European banks, it has become important to collaborate with commercial banks at home and abroad to amass the foreign currency funds needed to finance large-scale projects. Korea Eximbank will strengthen its ties with commercial banks by continuing to arrange deals that take advantage of its experience in ship financing, while passing down related know-how to the participating banks.”

Since establishing a consultative group with domestic financial institutions including commercial banks, securities firms, and insurance companies in February 2012, Korea Eximbank has been working to expand cooperation with those institutions in project financing and other areas.