Designated purpose of the credit
Bank customer’s performance of payment obligations under an import contract for the delivery of goods/equipment or building of facilities by foreign contractors on a turn-key basis.
Requirements to the financial standing of the Borrower and security
According to the current requirements of Bank of Moscow.
Import contract value
Preferably not less than 1,000,000, — USD or EUR.
Terms of payment under the import contract
- 15% — advance payment (made by the Borrower independently or if necessary financed by Bank of Moscow for up to 1-2 years with the use of a documentary letter of credit. Financing conditions are similar to those for the Short-term import financing product);
- 85% — an irrevocable non-confirmed Letter of credit of the Bank of Moscow. Payments under the Letter of credit are made by the foreign financing bank out of the proceeds of the targeted interbank credit extended by Bank of Moscow under the insurance of a national ECA, against shipping or other documents agreed in the contract.
Kind of the credit product for the customer
Credit to form the coverage under the Letter of credit opened for settlements under an import contract.
Credit period
Up to 7 years, including the period required for manufacture and delivery of the equipment (up to 2 years) and credit repayment period (up to 5 years). The exact period is established after the foreign financing bank is defined and the Authorized body of the Bank decides to accept the credit risk related to the customer.
Credit amount
85% from the total value of the import contract.
Credit currency
USD or EUR. Usually the credit is made out in the currency of the contract.
Documentation
- Foreign trade contract,
- Credit request,
- Application for a Letter of credit,
- Credit Agreement,
- Security agreements,
- Contract of suretyship with the foreign financing bank (may be required in some cases depending on what foreign bank will finance the transaction).
The credit interest rate is established as follows
- From the Letter of credit opening date (credit extension date) till the date of its complete use a flat rate of Х% per annum is charged on the unused amount of the Letter of credit. The interest rate includes the commission of the foreign bank for confirmation of the Letter of credit and the Bank of Moscow credit risk premium.
- From the date of each payment under the Letter of credit till the credit repayment date a floating rate LIBOR*+Х% per annum (for credits in USD) or EURIBOR**+Х% per annum (for credits in EUR) is charged on all payments under the Letter of credit. The interest rate includes the commission of the foreign bank for confirmation of the Letter of credit and the Bank of Moscow credit risk premium.
* LIBOR (London Interbank Offered Rate) means the interbank offered rate for credits in US dollars extended to first-class borrowers in the international capital market.
** EURIBOR (Euro Interbank Offered Rate) means the interbank offered rate for credits in Euro extended to first-class borrowers in the international capital market.
Payment of interest
According to an agreed schedule, usually monthly. The LIBOR/EURIBOR rate is fixed for each 6 months two days prior to the beginning of each such period.
Repayment of the principal
According to an agreed schedule.
Additional commissions
Financing arrangement fee
0.X% (no more than 0.5%) of the credit amount, charged once. The fee is due and payable within 10 days from the date of signing the Credit Agreement.
Credit facility maintenance fee
0.X% (no more than 0.5%) per annum of the undrawn part of the credit facility from the date of signing the Credit Agreement to the date of opening the Letter of credit. The fee is paid monthly.
ECA premium for insuring the risks of the foreign financing bank
About 4-5% of the credit amount, charged once. The exact size of the commission is stated after an application is filed with ECA. At inclusion of the ECA insurance premium in the total value of the import contract it is paid by the Exporter that is 85% of this value is financed. However, increase in the total value of the contract will lead to increase in the amount of VAT and customs duties. Bank of Moscow is ready to conduct negotiations with the foreign financing bank to find an alternative financing scheme for the ECA insurance without its inclusion in the contract.
Other possible commissions
- The commission of Bank of Moscow for opening a Letter of credit can be included in the credit interest rate and not be charged separately.
- The Letter of credit is non-confirmed, therefore no foreign bank commission for confirmation is charged.
- Commissions of foreign banks (for advising, inspection of documents, execution, etc.) are generally paid by the Exporter according to the Contract.
