ANNOUNCEMENT 29 May 2014In May 2014, the government of Japan announced a change in its trade finance instruments.
NUMBER OF INTERVENTIONS
The Japan Bank for International Cooperation press release: Export Credit Line for JSW Steel Limited in India
Available at: http://www.jbic.go.jp/en/information/press/press-2014/0530-21432
JBIC information on export loans: http://www.jbic.go.jp/en/finance/export
On 29 May 2014, the Japan Bank for International Corporation (JBIC) signed two buyer's credit agreements with JSW Steel Limited in India totalling JPY 3 billion (approx. USD 26.4 million) and USD 30 million respectively. Notably the Japanese company JFE Steel holds a equity stake of 15% in JSW Steel. The credit lines are additionally co-financed by a private financial institution, in which the governmental agency Nippon Export and Investment Insurance will provide a Buyer's credit insurance for the co-financed amount. The total co-financed potion amounts to JPY 5 billion (USD 49 million) and USD 50 million, respectively.
The loan will finance the Indian steel manufacturer 's purchase of steel manufacturing-related facilities and technological services from Japanese companies.
In this context the Bank stated: 'As such, these loans will support the further export expansion of machinery and equipment of Japanese companies, by responding timely and flexibly to JSW Steel's investment demand, and thereby contribute to maintaining and strengthening the international competitiveness of Japanese industries.'
Buyer's credit agreements
JBIC provides export loans also named buyer's credit to overseas importers. Loans are obtained if it finances the purchase of Japanese machinery, equipment or technology in specific eligible sectors. The Bank hereto stated that these loans are intended to 'positively contribute to Japanese companies'. Further information can be found on the Bank's website under export loans.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.