WASHINGTON, Aug. 17, 2006—The U.S. Department of Agriculture today announced the availability of the following credit guarantees for export sales of U.S. manufactured goods and services to improve existing agriculture-related facilities in the Central America Region under the Commodity Credit Corporation's Facility Guarantee Program (FGP) for fiscal year 2006:
Total Amount Available: $10 million
Geographical Area: Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama
FGP helps expand exports of U.S. agricultural products to countries where inadequate storage, processing or handling capacity limit trade potential. Under this program, Commodity Credit Corporation (CCC) guarantees payments due from approved foreign banks to exporters or financial institutions in the United States for credit sales of U.S. goods or services to improve agriculture-related facilities.
This program announcement is issued in accordance with title 7, section 1493.230(a), of the Code of Federal Regulations.
Exporters may apply for FGP payment guarantees on a first-come, first-served basis. CCC guarantees will not exceed $5 million per project. When submitting an application in accordance with section 1493.240, exporters must make a clear and convincing case that the primary benefit of the proposed project will be to U.S. agricultural exports. CCC will not consider FGP applications for sales of used equipment.
METHOD OF PAYMENT AND RISK COVERED
CCC will issue a payment guarantee only in connection with a sale for which payment will be made under an irrevocable letter of credit issued by an eligible foreign bank (sections 1493.230(d) and (e)). CCC will agree to pay the exporter, or the exporter’s assignee, in the event the foreign bank fails to pay under the letter of credit or related obligation (section 1493.260(a)).
TERMS OF COVERAGE
CCC will provide coverage up to 95 percent of principal (facility base value) as determined in accordance with section 1493.260(b)(2) on credit terms up to eight years. Principal payments plus accrued interest are due at not more than six-month intervals. Adjustable interest coverage is also offered, not to exceed 80 percent of the average investment rate of the most recent Treasury 26-week bill auction as announced by the U.S. Department of the Treasury prior to the date the eligible interest is established or adjusted.
For a given export, the rate used to compute eligible interest will be established as of the date of export and remain in effect through the first principal repayment due date. CCC will adjust the rate to determine eligible interest as of each principal repayment due date. That adjusted interest rate shall take effect on the day after a principal repayment due date and remain in effect through the next principal repayment due date.
ELIGIBLE BANKS IN THE CENTRAL AMERICA REGION
Any bank approved by CCC for the Central America Region is eligible. For a complete list of eligible banks, refer to the CCC "GSM Program Foreign Bank Obligors" Web page located at http://www.fas.usda.gov/excredits/foreignbanks.html. Exporters are advised to obtain from their foreign buyer the name of the CCC-approved foreign bank that will be opening the letter of credit.
APPLICATION AND EXPOSURE FEES
A nonrefundable payment of $200 must accompany each application for a payment guarantee. CCC also charges an exposure fee payable to CCC before the payment guarantee is issued. Exposure fee rates are subject to change. These rates provide for adjustable eligible interest (per annum) as described above. Some fee parameters are determined by specific project requirements. The exposure fee rate will be set at the time CCC issues a final commitment to the exporter.
(Subject to Change)
For a complete list of fees refer to the "Facility Guarantee Program Estimated Fee Rate Schedule" Web page located at http://www.fas.usda.gov/excredits/fgpfees.html. These fees are listed by risk category. A complete list of countries and their associated risk category is available on the CCC "Country Risk Category" Web page located at http://www.fas.usda.gov/excredits/countryrisk.html.
SUBMISSION OF APPLICATIONS
Applications must be received by CCC at the address indicated below no later than Sept. 30, 2006.
POINTS OF CONTACT
Applications, modifications, inquiries or withdrawals may be mailed or faxed to the attention of Division Director, PD/Export Credits, Foreign Agricultural Service, USDA, Stop 1034, 1400 Independence Avenue, SW, Washington, DC 20250-1034; tel. (202) 720-4221; fax (202) 690-0251. All applications must follow the format specified in sections 1493.240 and 1493.250.
For further information, contact the Contract and Registration Branch of FAS at (202) 720-3224, or by e-mail at AskGSM@fas.usda.gov.
For the latest updates on FAS programs and activities, go to the FAS Web page at http://www.fas.usda.gov.