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WASHINGTON - To further support American businesses, workers, and exports, the Export-Import Bank of the United States (EXIM) Board of Directors yesterday unanimously voted to renew its partnership with the Private Export Funding Corporation (PEFCO) for 25 years, which equals the maximum combined term of an EXIM-authorized long-term transaction. As part of this renewed partnership, the EXIM Board of Directors approved seven key reforms to the EXIM-PEFCO partnership that will be implemented through the Standard Operating Procedures (SOPs) that guide the partnership.

The reforms are as follows:

1. Require Regular Reviews of PEFCO:
   • Every time the SOPs are renewed (typically every two or three years), a third-party will conduct a study and EXIM will request that the EXIM Inspector General evaluate PEFCO and make recommendations to EXIM regarding the partnership. The EXIM Board of Directors will evaluate these recommendations to modify the SOPs, evaluate the usefulness and appropriateness of PEFCO, and determine whether EXIM should continue the partnership.
2. Enhance PEFCO's Reporting to EXIM:
   • Require PEFCO to provide numerous reports on various topics including its annual activity towards each of EXIM's mandates and an annual analysis of the mitigants and protections that PEFCO has in place for EXIM's exposure to PEFCO. Additionally, PEFCO will be required to contribute information to an EXIM report on market gaps for small business exporters and potential market-based solutions, as well as harmonize its small business definition with EXIM's definition in order to better support U.S. small businesses.
3. Lower PEFCO's Dividend Cap:
   • Under the new SOPs, PEFCO's dividend cap is reduced from 50 percent to 35 percent of earnings, to ensure PEFCO's long-run capital position will be prioritized over short-term stockholder gains.
4. Further U.S. Competitiveness with China:
   • Adds EXIM's new Congressional mandates on China and Transformational Exports to PEFCO's organizational goals, encouraging the role of private capital in this strategic effort, one of the most important mandates in EXIM's 86-year history.
5. Restrict PEFCO Activity with China:
   • Consistent with Section 408 of EXIM's 2019 reauthorization, restricting PEFCO's support of EXIM-guaranteed transactions over $25 million in which the government of China is the end user, lender, or obligor.
6. Encourage Small Business Support:
   • Adds credit unions to PEFCO's list of eligible lenders, encouraging PEFCO's funding of small businesses across the country.
7. Protect the Taxpayer:
   • With this board action, EXIM approved PEFCO's Collateralized Notes program (which does not receive EXIM's guarantee on interest) as an ongoing authority, allowing for more tailored use of the Secured Notes program (which does receive EXIM's guarantee on interest) and potentially limiting EXIM's exposure to PEFCO in the future.

PEFCO was created in 1970 with input from EXIM the U.S. Department of the Treasury, U.S. Department of Commerce, U.S. Department of Justice, and the Federal Reserve Board of Governors to finance U.S. exports by complementing the financing available from commercial banks and other lenders. PEFCO provides a broad range of export finance programs as a direct lender and as a secondary market buyer of export loans originated by other lenders.

When the term of the EXIM-PEFCO partnership was first conceived in 1970, a 25-year term was agreed to because it enabled PEFCO to take on any long-term deal EXIM could approve for the duration of the combined term of the disbursement and repayment periods. At that time, the longest authorizations EXIM could enter into were for nuclear power projects, which had a combined term of nearly 25 years.

"A 25-year renewal of the Guarantee and Credit Agreement correlates with some of the longest transactions that EXIM can authorize - those with 18-year repayment terms and seven years of disbursement, resulting in 25-year deals. These transactions fall under sectors such as nuclear power and renewable energy, among others. In order to have PEFCO contribute to EXIM's effort to counter China, whose programs can include 25-year terms, the market needs confidence that PEFCO will be able to fund these types of very long-term deals," said Jim Cruse, Senior Vice President, EXIM's Office of Policy Analysis and International Relations.

"President Trump and the U.S. Congress have spoken loud and clear on the value of EXIM, and the EXIM-PEFCO partnership complements EXIM's Congressional mandates by increasing U.S. competitiveness, including when it comes to countering China, assisting U.S. small businesses, and supporting exports to sub-Saharan Africa," said EXIM President and Chairman Kimberly A. Reed. "Yesterday's vote to continue this partnership with reforms will assist us in achieving those goals and work towards EXIM's vision of keeping America strong. I'd like to highlight and voice my appreciation for Director Bachus' commitment to strong oversight, which directly led to our unanimous approval of a routine review cycle of PEFCO going forward. In 2023, the EXIM Board of Directors will request comments from both an independent third party and the Inspector General, on the EXIM-PEFCO partnership and can choose to re-evaluate the terms of the agreement then or at any time thereafter," Chairman Reed added.

"Today, perhaps more than ever, PEFCO plays an important role in the global economy, as we look to level the playing field for U.S. exporters. At the same time, I am steadfast in my belief that EXIM must play a responsible role in reviewing this relationship on a regular basis, with a sufficient level of detail. With this change we will holistically evaluate PEFCO before each renewal of the Standard Operating Procedures (SOPs). The SOPs are typically renewed, with EXIM Board approval required, every two or three years," said EXIM Board Member Spencer T. Bachus, III. "As Chairman Reed stated, the Board will now consider the renewal of the SOPs before the end of fiscal year 2023. At that time EXIM may, unilaterally, halt any new business with PEFCO, whether it is through new EXIM-guaranteed transactions or new issuances of secured notes. Thus, this vote strikes a balance between the needs of our exporters today, with our responsibility to protect taxpayers into the future. Additionally, we solicited opinions from the National Advisory Council on International Monetary and Financial Policies, which is Chaired by the U.S. Department of Treasury, and members of Congress on renewal with PEFCO, but we received no comments or concerns on EXIM's relationship with PEFCO."

"Yesterday's votes build on 50 years of a successful public-private partnership and will provide long-term certainty to the markets, business community, and foreign buyers," said EXIM Board Member Judith D. Pryor. "We also enacted important modifications designed to ensure PEFCO continues to fulfill EXIM's mission of supporting American jobs through exports."

"The renewal of the EXIM-PEFCO partnership is welcome news for exporters of all sizes across the country, as they seek to compete against the unfair subsidies from the Chinese Communist Party," said EXIM Advisory Committee Chairman and former Member of Congress Stevan Pearce. "U.S. exporters will continue to have access to the private capital markets through this arrangement. These types of public-private partnersh