Regulation (EU) No 1233/2011 of the European Parliament and of the Council of 16 November 2011 on the application of certain guidelines in the field of officially supported export credits and repealing Council Decisions 2001/76/EC and 2001/77/EC

• 115.Is the guarantee legally valid and capable of being enforced in the guarantor country’s jurisdiction?

• 116.Is the guarantor creditworthy in relation to the size of the guaranteed debt?

• 117.Is the guarantor subject to the monetary control and transfer regulations of the country in which it is located?

• 118.Percentage of the total amount at risk (i.e. principal and interest) that is covered by the guarantee

• 119.Does any financial relationship exist between the guarantor and the obligor?

• 120.Type of relationship

• 121.Is the guarantor legally and financially independent and can it fulfil the obligor’s payment obligation?

• 122.Would the guarantor be affected by events, regulations or sovereign intervention in the obligor’s country?

- 123.Comments, notes and/or explanations regarding the information provided in Section II i).

For the application of an offshore future flow structure combined with an offshore escrow account:

• 1. • 134.Confirmation that the criteria listed in Annex X have been met

• 135.Information on additional factors taken into consideration and/or any other comments regarding the application of an offshore future flow structure combined with an offshore escrow account

For local currency financing:

• 1. • 141.Confirmation that the criteria listed in Annex X have been met

• 142.Local currency used

• 143.Information on additional factors taken into consideration and/or any other comments regarding the application of local currency financing

- 144.Comments, notes and/or explanations regarding the information provided in Section II j).

• 1. –152.The specific buyer risk credit enhancements and corresponding credit enhancement factors applied

- 153.Comments, notes and/or explanations regarding the information provided in Section II k).

• 154.Total amount of trade-related aid, SDR scale

• 155.Composition of trade-related aid package: share of non-concessional export credits in conformity with the Arrangement

• 156.Composition of trade-related aid package: share of other funds at or near market rates

• 157.Composition of trade-related aid package: share of other official funds with a concessionality level of less than the minimum permitted under Article 33 except in cases of matching

• 158.Composition of trade-related aid package: share of down payment from the purchaser

• 159.Composition of trade-related aid package: share of payments on or before the starting point of credit that are not considered

• 160.Composition of trade-related aid package: share of grants

• 161.Composition of trade-related aid package: share of concessional credits

• 162.Terms and conditions of concessional credits: grace period

• 163.Terms and conditions of concessional credits: length of repayment period

• 164.Terms and conditions of concessional credits: repayment frequency

• 165.Terms and conditions of concessional credits: repayment profile

• 166.Terms and conditions of concessional credits: currency

• 167.Terms and conditions of concessional credits: interest rate

• 168.Terms and conditions of concessional credits: applicable DDR

• 169.Terms and conditions of concessional credits: concessionality level

• 170.Overall concessionality level of the trade-related aid package

- 171.Comments, notes and/or explanations regarding the information provided in Section II l).

ANNEX VI

CALCULATION OF THE MINIMUM PREMIUM RATES FOR COUNTRY RISK CATEGORY 1-7 TRANSACTIONS

MPR Formula

The formula for calculating the applicable MPR for an export credit involving an obligor/guarantor in a country classified in Country Risk Categories 1-7 is:

MPR = {[(ai * HOR + bi) * max (PCC, PCP)/0,95] * (1-LCF) + [cin * PCC/0,95 * HOR * (1-CEF)]} QPFi * PCFi BTSF * (1- min (TERM, 0,15))

where:

• — ai = country risk coefficient in country risk category i (i = 1-7)

• — cin = buyer risk coefficient for buyer category n (n = SOV+, SOV/CCO, CC1-CC5) in country risk category i (i = 1-7)

• — bi = constant for country category risk category i (i = 1-7)

• — HOR = horizon of risk

• — PCC = commercial (buyer) risk percentage of cover

• — PCP = political (country) risk percentage of cover

• — CEF = credit enhancements factor

• — QPFi = quality of product factor in country risk category i (i = 1-7)

• — PCFi = percentage of cover factor in country risk category i (i = 1-7)

• — BTSF = better than sovereign factor

• — LCF = local currency factor

- — TERM = term adjustment factor

Applicable Country Risk Classification

The applicable country risk classification is determined according to Article 21 e) of the Arrangement, which in turn determines the country risk coefficient (ai) and constant (bi) that are obtained from the following table:

| | 1 | 2 | 3 | 4 | 5 | 6 | 7 |

| --- | --- | --- | --- | --- | --- | --- | --- | | a | 0,090 | 0,200 | 0,350 | 0,550 | 0,740 | 0,900 | 1,100 | | b | 0,350 | 0,350 | 0,350 | 0,350 | 0,750 | 1,200 | 1,800 |

Selection of the Appropriate Buyer Risk Category

The appropriate buyer risk category is selected from the following table, which provides the combinations of country and buyer risk categories that have been established and the agreed concordance between buyer risk categories CC1-CC5 and the classifications of accredited CRAs. Qualitative descriptions of each buyer risk category (SOV+ to CC5) have been established to facilitate the classification of obligors (and guarantors) and are provided in Annex X.

Country Risk Category	Country Risk Category	Country Risk Category	Country Risk Category	Country Risk Category	Country Risk Category	Country Risk Category
1	2	3	4	5	6	7
SOV+	SOV+	SOV+	SOV+	SOV+	SOV+	SOV+
SOV/CC0	SOV/CC0	SOV/CC0	SOV/CC0	SOV/CC0	SOV/CC0	SOV/CC0
CC1 AAA to AA-	CC1 A+ to A-	CC1 BBB+ to BBB-	CC1 BB+ to BB	CC1 BB-	CC1 B+	CC1 B
CC2 A+ to A-	CC2 BBB+ to BBB-	CC2 BB+ to BB	CC2 BB-	CC2 B+	CC2 B	CC2 B- or worse
CC3 BBB+ to BBB-	CC3 BB+ to BB	CC3 BB-	CC3 B+	CC3 B	CC3 B- or worse
CC4 BB+ to BB	CC4 BB-	CC4 B+	CC4 B	CC4 B- or worse
CC5 BB- or worse	CC5 B+ or worse	CC5 B or worse	CC5 B- or worse

The selected buyer risk category, in combination with the applicable country risk category determines the buyer risk coefficient (cin) that is obtained from the following table:

| Buyer Risk Category | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category |

| --- | --- | --- | --- | --- | --- | --- | --- | | Buyer Risk Category | 1 | 2 | 3 | 4 | 5 | 6 | 7 | | SOV+ | 0,000 | 0,000 | 0,000 | 0,000 | 0,000 | 0,000 | 0,000 | | SOV/CC0 | 0,000 | 0,000 | 0,000 | 0,000 | 0,000 | 0,000 | 0,000 | | CC1 | 0,110 | 0,120 | 0,110 | 0,100 | 0,100 | 0,100 | 0,125 | | CC2 | 0,200 | 0,212 | 0,223 | 0,234 | 0,246 | 0,258 | 0,271 | | CC3 | 0,270 | 0,320 | 0,320 | 0,350 | 0,380 | 0,480 | n/a | | CC4 | 0,405 | 0,459 | 0,495 | 0,540 | 0,621 | n/a | n/a | | CC5 | 0,630 | 0,675 | 0,720 | 0,810 | n/a | n/a | n/a |

Horizon of Risk (HOR)

The Horizon of Risk (HOR) is calculated as follows:

For standard repayment profiles (i.e. equal semi-annual repayments of principal):

HOR = (length of the disbursement period * 0,5) + the length of the repayment period

For non-standard repayment profiles:

HOR = (length of the disbursement period * 0,5) + (weighted average life of the repayment period – 0,25)/0,5

In the above formulas, the unit of measurement for time is years.

Percentage of Cover for Commercial (Buyer) Risk (PCC) and Political (Country) Risk (PCP)

The Percentages of Cover (PCC and PCP) expressed as a decimal value (i.e. 95 % is expressed as 0,95) in the MPR formula.

Buyer Risk Credit Enhancements

The value of the credit enhancement factor (CEF) is 0 for any transaction that is not subject to any buyer risk credit enhancements. The value of the CEF for transactions that are subject to buyer risk credit enhancements is determined according to Annex X, subject to the restrictions set out in Article 27 c) of the Arrangement and may not exceed 0,35.

Quality of Product Factor (QPF)

The QPF is obtained from the following table:

| Product Quality | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category |

| --- | --- | --- | --- | --- | --- | --- | --- | | Product Quality | 1 | 2 | 3 | 4 | 5 | 6 | 7 | | Below Standard | 0,9965 | 0,9935 | 0,9850 | 0,9825 | 0,9825 | 0,9800 | 0,9800 | | Standard | 1,0000 | 1,0000 | 1,0000 | 1,0000 | 1,0000 | 1,0000 | 1,0000 | | Above Standard | 1,0035 | 1,0065 | 1,0150 | 1,0175 | 1,0175 | 1,0200 | 1,0200 |

Percentage of Cover Factor (PCF)

The PCF is determined as follows:

For (max(PCC, PCP) ≤ 0,95, PCF = 1)

For (max(PCC, PCP) > 0,95, PCF = 1 + ((max(PCC, PCP) – 0,95)/0,05) * (percentage of cover coefficient)

The percentage of cover coefficient is obtained from the following table:

| | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category | Country Risk Category |

| --- | --- | --- | --- | --- | --- | --- | --- | | | 1 | 2 | 3 | 4 | 5 | 6 | 7 | | Percentage of cover coefficient | 0,00000 | 0,00337 | 0,00489 | 0,01639 | 0,03657 | 0,05878 | 0,08598 |

Better than Sovereign Factor (BTSF)

When an obligor is classified in the ‘better than sovereign’ (SOV+) buyer risk category, BTSF = 0,9, otherwise BTSF = 1.

Local Currency Factor (LCF)

For transaction making use of local currency country risk mitigation, the value of the LCF may not exceed 0,2. The value of the LCF for all other transactions is 0.

Term Adjustment Factor (TERM)

The Term Adjustment Factor (TERM) may only be applied for obligors that a Participant classifies in buyer risk categories equivalent to speculative grade (CRA rating equivalent of BB+ or worse) according to the concordance table in this Annex, including Buyer categories SOV+ and SOV/CC0 in country risk categories 5-7 and for transactions where the Horizon of risk (HOR) is greater than 10 years. In such a case, TERM = 0,018 * (HOR – 10). This adjustment is capped and may not exceed 15 %.

ANNEX VII

PREMIUM BENCHMARKS FOR MARKET BENCHMARK TRANSACTIONS

Un-covered Tranche of Export Credits or the non-ECA Covered Part of a Syndicated Loan

The price indicated by private banks/institutions with respect to the uncovered tranche of the export credit in question (or sometimes as the non-ECA covered part of a syndicated loan) may represent the best match to ECA cover. Pricing on such un-covered portions or non-covered parts should only be used if provided on commercial terms (e.g. this would exclude IFI funded portions).

Name-Specific Corporate Bonds

Corporate bonds reflect name specific credit risk. Care should be used in matching in terms of the ECA contract characteristics, such as term of maturity, and currency denomination, and any credit enhancements. If primary corporate bonds (i.e. all-in yield upon issuance) or secondary corporate bonds (i.e. the option adjusted spread over the appropriate curve, which is usually the relevant currency swap curve) are used, those for the obligor should be used in the first instance; if not available, primary or secondary corporate bonds from Related Entities may be used.

Name-Specific Credit Default Swaps

Credit Default Swaps (CDS) are a form of protection against default. The CDS spread is the amount paid per period by the buyer of the CDS as a percentage of notional principal, and is usually expressed in basis points. The CDS buyer effectively buys insurance against default by making payments to the seller of the CDS for the life of the swap, or until the credit event occurs. A CDS curve for the obligor should be used in the first instance; if not available, CDs curves from Related Entities may be used.

Loan Benchmarks

Primary loan benchmarks (i.e. pricing upon issuance) or secondary loan benchmarks (i.e. the current yield on the loan expected by the financial institution purchasing the loan from another financial institution). All fees must be known for primary loan benchmarks so that the all-in yield can be calculated. If loan benchmarks are used, those for the obligor should be used in the first instance; if not available, those from similar entities may be used.

Benchmark Market Curves

Benchmark market curves reflect the credit risk of a whole sector or class of buyers. This market information may be relevant when name specific information is not available. In general, the quality of the information inherent to these markets depends upon their liquidity. In any case, one should look for market instruments that provide the closest match in terms of the ECA contract characteristics, such as date, credit rating, term of maturity, and currency denomination.

ANNEX VIII

CRITERIA AND CONDITIONS GOVERNING THE APPLICATION OF A THIRD-PARTY REPAYMENT GUARANTEE AND THE CRITERIA FOR ASSESSING MULTILATERAL OR REGIONAL INSTITUTIONS

PURPOSE

This Annex provides the criteria and conditions that govern the application of third-party repayment guarantees according to Article 21 e) of the Arrangement. It also provides the criteria by which multilateral or regional institutions should be assessed when determining if an institution should be subject to the premium rules for Market Benchmark Transactions in Article 21 c) of the Arrangement.

APPLICATION

Case 1: Guarantee for the Total Amount at Risk

When security in the form of a repayment guarantee from an entity is provided for the total amount at risk (i.e. principal and interest), the applicable Country Risk Classification and Buyer Risk Category may be that of the guarantor when the following criteria are met:

• — The guarantee covers the entire duration of the credit.

• — The guarantee is irrevocable, unconditional and available on-demand.

• — The guarantee is legally valid and capable of being enforced in the guarantor country’s jurisdiction.

• — The guarantor is creditworthy in relation to the size of the guaranteed debt.

• — The guarantor is subject to the monetary control and transfer regulations of the country in which it is located, except when the guarantor is a multilateral institution that the Participants have agreed is generally exempt from such controls and limitations.

If the guarantor is a subsidiary/parent of the guaranteed entity, Participants shall, on a case-by-case basis, determine whether: (1) in consideration of the relationship between the subsidiary/parent and the degree of legal commitment of the parent, the subsidiary/parent is legally and financially independent and could fulfil its payment obligations; (2) the subsidiary/parent could be affected by local events/regulations or sovereign intervention; and (3) the Head Office would in the event of a default regard itself as being liable.

Case 2: Guarantee Limited in Amount

When security in the form of a repayment guarantee from an entity is provided for a limited amount at risk (i.e. principal and interest), the applicable Country Risk Classification and Buyer Risk Category may be that of the guarantor for the portion of the credit subject to the guarantee, providing that all other relevant criteria listed under Case 1 are met.

For the unguaranteed portion, the applicable Country Risk Classification and Buyer Risk Category is that of the obligor.

Criteria for the Assessment of Multilateral or Regional Institutions

The Participants may agree that a multilateral or regional institution is subject to the premium rules for Market Benchmark Transaction in Article 21 c) if the institution is generally exempt from the monetary control and transfer regulations of the country in which it is located. Such institutions shall be assessed on a case-by-case basis on their own merits and in consideration of whether:

• — the institution has statutory and financial independence;

• — all of the institution’s assets are immune from nationalisation or confiscation;

• — the institution has full freedom of transfer and conversion of funds;

• — the institution is not subject to government intervention in the country where it is located;

• — the institution has tax immunity; and

• — there is an obligation of all its Member countries to supply additional capital to meet the institution’s obligations.

The assessment should also take into consideration the historical payment record in situations of country credit risks default either in the country where it is located or in an obligor’s country, and any other factors that may be deemed appropriate in the assessment process.

The list of such multilateral and regional institutions is not closed and a Participant may nominate an institution for review according to the above-listed considerations. The list of multilateral and regional institutions that are subject to the premium rules for Market Benchmark Transaction in Article 21 c) shall be made public by the Participants.

ANNEX IX

BUYER RISK CATEGORIES QUALITATIVE DESCRIPTIONS

Better than Sovereign (SOV+)

This is an exceptional classification. The entity achieving such a classification is one with an exceptionally strong credit profile that could be expected to fulfil its payment obligations during a period of sovereign debt distress or even default. International Credit Rating Agencies issue regular reports listing Corporate and Counterparty Ratings that exceed the Sovereign’s Foreign Currency Rating. Except when the risk sovereign has been identified through the Sovereign Risk Assessment Methodology as being significantly higher than country risk, Participants proposing that an entity be classified as better than sovereign shall reference such better than sovereign ratings in support of their recommendation. In order to be classified as better than its host sovereign, an entity would be expected to display several or normally a majority of the following characteristics or equivalents:

• — a strong credit profile;

• — substantial foreign exchange earnings relative to its currency debt burden;

• — production facilities and cash generation ability from subsidiaries or operations offshore, especially those domiciled in highly rated sovereigns, i.e. multinational enterprises;

• — a foreign owner or a strategic partner which could be relied on as a source of financial support in the absence of a formal guarantee;

• — a history of preferential treatment of the entity by the sovereign, including exemption from transfer and convertibility constraints and surrender requirements for export proceeds, and favourable tax treatment;

• — committed credit lines from highly rated international banks, especially credit lines without a material adverse change (MAC) clause which enable banks to withdraw committed facilities in the event of a sovereign crisis or other risk events; and

• — assets held offshore, especially liquid assets, often as a result of rules allowing exporters to trap and maintain cash balances offshore that are available for debt service.

Normally the SOV+ buyer risk category is not applicable to:

• — publicly-owned entities and utilities, sub-sovereigns as line ministries, regional governments, etc.;

• — financial institutions domiciled in the sovereign’s jurisdiction; and

- — entities primarily selling to the domestic market in local currency.

Sovereign (SOV)

Sovereign obligors/guarantors are entities that are explicitly legally mandated to enter into a debt payment obligation on the behalf of the Sovereign State, typically Ministry of Finance or Central bank ([^E0047]). A risk designated as sovereign is one where:

• — the obligor/guarantor is legally mandated to enter into a debt payment obligation on behalf of the Sovereign and thereby commits the full faith and credit of the sovereign; and

- — in the event of rescheduling of sovereign risk, the debt in question would be included in the rescheduling and payment obligations acquired by the sovereign by virtue of the rescheduling.

Equivalent to the Sovereign (CC0): Exceptionally Good Credit Quality

The ‘equivalent to sovereign’ category embraces two basic types of obligors/guarantors:

• — Public entities where due diligence reveals that either the buyer has the implicit full faith and credit/support of the sovereign or that the likelihood of sovereign liquidity and solvency support is very high, both in relation to recovery prospects as well as default risk. Non-sovereign public entities equivalent to the sovereign would also include companies owned by the government with a monopoly or near monopoly on operations in a sector (e.g. power, oil, gas).

• — Corporate entities with an exceptionally strong credit profile, displaying features in terms of both default and recovery prospects, which indicate that the risk could be seen as being equivalent to sovereign. Candidates could include strong blue chip corporates or very important banks for which the likelihood of sovereign liquidity and solvency support is high.

Exceptionally good credit quality implies that the risk of payment interruption is expected to be negligible and that the entity has an exceptionally strong capacity for repayment and this capacity is not likely to be affected by foreseeable events. The credit quality is typically manifested in a combination of some, if not all, of the following characteristics of the entity’s business and financial profile:

• — exceptionally good to very good cash and income generation

• — exceptionally good to very good liquidity levels

• — exceptionally low to very low leverage

• — excellent to very strong business profile with proven and very strong management abilities

The entity is also characterised by a high quality of financial and ownership disclosure, unless there is a very high likelihood of support from a parent (or sovereign) with a buyer risk classification that is equal to or better than what corresponds to this buyer risk category.

Depending on the classification of the country in which the obligor/guarantor is domiciled, it is likely that an obligor/guarantor classified in buyer risk category CC0 would be rated between AAA (Country Category 1) and B (Country Category 7) by accredited CRAs.

Very Good Credit Quality (CC1)

The risk of payment interruption is expected to be low or very low. The obligor/guarantor has a very strong capacity for repayment and this capacity is not likely to be affected by foreseeable events. The obligor/guarantor has a limited or very limited susceptibility to adverse effects of changes in circumstances and economic conditions. The credit quality is typically manifested in a combination of some, if not all, of the following characteristics of the business and financial profile:

• — very good to good cash and income generation

• — very good to good liquidity levels

• — very low to low leverage

• — very strong business profile with proven management abilities

The entity is also characterised by a high quality of financial and ownership disclosure, unless there is a very high likelihood of support from a parent (or sovereign) with a buyer risk classification that is equal to or better than what corresponds to this buyer risk category.

Depending on the classification of the country in which the obligor/guarantor is domiciled, it is likely that an obligor/guarantor classified in buyer risk category CC1 would be rated between AAA (Country Category 1) and B (Country Category 7) by accredited CRAs.

Good to Moderately Good Credit Quality, Above Average (CC2)

The risk of payment interruption is expected to be low. The obligor/guarantor has a good to moderately good capacity for repayment and this capacity is not likely to be affected by foreseeable events. The obligor/guarantor has a limited susceptibility to adverse effects of changes in circumstances and economic conditions. The credit quality is typically manifested in a combination of some, if not all, of the following characteristics of the business and financial profile:

• — good to moderately good cash and income generation

• — good to moderately good liquidity levels

• — low to moderately low leverage

• — moderately strong business profile with proven management abilities

The entity is also characterised by a high quality of financial and ownership disclosure, unless there is a very high likelihood of support from a parent (or sovereign) with a buyer risk classification that is equal to or better than what corresponds to this buyer risk category.

Depending on the classification of the country in which the obligor/guarantor is domiciled, it is likely that an obligor/guarantor classified in buyer risk category CC2 would be rated between A+ (Country Category 1) and B- or worse (Country Category 7) by accredited CRAs.

Moderate Credit Quality, Average (CC3)

The risk of payment interruption is expected to be moderate or moderately low. The obligor/guarantor has a moderate or moderately good capacity for repayment. There is a possibility of credit risk developing as the obligor/guarantor faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to inadequate capacity to meet timely payments. However, business or financial alternatives may be available to allow financial commitments to be met. The credit quality is typically manifested in a combination of some, if not all, of the following characteristics of the business and financial profile.

• — moderately good to moderate cash and income generation

• — moderately good to moderate liquidity levels

• — moderately low to moderate leverage

• — moderate business profile with proven management abilities

The entity is also characterised by an adequate quality of financial and ownership disclosure, unless there is a very high likelihood of support from a parent (or sovereign) with a buyer risk classification that is equal to or better than what corresponds to this buyer risk category.

Depending on the classification of the country in which the obligor/guarantor is domiciled, it is likely that an obligor/guarantor classified in buyer risk category CC3 would be rated between BBB+ (Country Category 1) and B- or worse (Country Category 6) by accredited CRAs.

Moderately Weak Credit Quality, Below Average (CC4)

The risk of payment interruption is expected to be moderately weak. The obligor/guarantor has a moderate to moderately weak capacity for repayment. There is a possibility of credit risk developing as the obligor/guarantor faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to inadequate capacity to meet timely payments. However, business or financial alternatives may be available to allow financial commitments to be met. The credit quality is typically manifested in a combination of some, if not all, of the following characteristics of the business and financial profile:

• — moderate to moderately weak cash and income generation

• — moderate to moderately weak liquidity levels

• — moderate to moderately high leverage

• — moderately weak business profile with limited track record of management abilities

The entity is also characterised by an adequate quality of financial and ownership disclosure, unless there is a very high likelihood of support from a parent (or sovereign) with a buyer risk classification that is equal to or better than what corresponds to this buyer risk category.

Depending on the classification of the country in which the obligor/guarantor is domiciled, it is likely that an obligor/guarantor classified in buyer risk category CC4 would be rated between BB+ (Country Category 1) and B- or worse (Country Category 5) by accredited CRAs.

Weak Credit Quality (CC5)

The risk of payment interruption is expected to be high to very high. The obligor/guarantor has a moderately weak to weak capacity for repayment. The obligor/guarantor currently has the capacity to meet repayments but a limited margin of safety remains. However, there is a likelihood of developing payment problems as the capacity for continued payment is contingent upon a sustained, favourable business and economic environment. Adverse business, financial, or economic conditions will likely impair capacity or willingness to repay. The credit quality is typically manifested in a combination of some, if not all, of the following characteristics of the business and financial profile:

• — moderately weak to weak to very weak cash and income generation

• — moderately weak to weak liquidity levels

• — moderately high to high leverage

• — weak business profile with limited or no track record of management abilities

The entity is also characterised by a poor quality of financial and ownership disclosure, unless there is a very high likelihood of support from a parent (or sovereign) with a buyer risk classification that is equal to or better than what corresponds to this buyer risk category.

Depending on the classification of the country in which the obligor/guarantor is domiciled, it is likely that an obligor/guarantor classified in buyer risk category CC5 would be rated between BB- (Country Category 1) and B- or worse (Country Category 4) by accredited CRAs.

ANNEX X

CRITERIA AND CONDITIONS GOVERNING THE APPLICATION OF COUNTRY RISK MITIGATION TECHNIQUES AND BUYER RISK CREDIT ENHANCEMENTS

PURPOSE

This Annex provides detail on the use of country risk mitigation techniques listed in Article 26 a) of the Arrangement and the buyer risk credit enhancements listed in Article 27 a) of the Arrangement; this includes the criteria, conditions and specific circumstances which apply to their use as well as the impact on the MPRs.

COUNTRY RISK MITIGATION TECHNIQUES

1. Offshore Future Flow Structure Combined with Offshore Escrow Account

Definition:

A written document, such as a deed or a release or trustee arrangement, sealed and delivered to a third party, i.e. a person not party to the instrument, to be held by such third party until the fulfilment of certain conditions and then to be delivered by it to the other party to take effect. If the following criteria are satisfied subject to consideration of the additional factors listed, this technique can reduce or eliminate the transfer risks, mainly in the higher risk country categories.

Criteria:

• — The escrow account is related to a foreign exchange-earning project and the flows into the escrow account are generated by the project itself and/or by other offshore export receivables.

• — The escrow account is held offshore, i.e. located outside of the country of the project where there are very limited, transfer or other country risks (i.e. in a High Income OECD country or High Income Euro Area country).

• — The escrow account is located in a first class bank, which is not directly or indirectly controlled by interests of the obligor or by the country of the obligor.

• — The funding of the account is secured through long-term or other appropriate contracts.

• — The combination of the sources of revenues (i.e. generated by the project itself and/or the other sources) of the obligor flowing through the account are in hard currency and can reasonably be expected to be collectively sufficient for the service of the debt for the entire duration of the credit, and come from one or more creditworthy foreign customers located in better risk countries than the country in which the project is located (i.e. normally High Income OECD Countries or High Income Euro Area Countries).

• — The obligor irrevocably instructs the foreign customers to pay directly into the account (i.e. the payments are not forwarded through an account controlled by the obligor or through its country).

• — The funds which have to be kept within the account are equal to at least six months of debt service. Where flexible repayment terms are being applied under a project finance structure, an amount equivalent to the actual six months debt service under such flexible terms are to be kept within the account; this amount may vary over time depending on the debt service profile.

• — The obligor has restricted access to the account (i.e. only after payment of the debt service under the credit).

• — The revenues deposited in the account are assigned to the lender as direct beneficiary, for the entire life of the credit.

• — The opening of the account has received all the necessary legal authorisations from the local and any other appropriate authorities.

- — The escrow account and contractual arrangements may not be conditional and/or revocable and/or limited in duration.

Additional factors to be taken into consideration:

The technique applies subject to a case-by-case consideration of the above characteristics and, inter alia, with regard to:

• — the country, the obligor (i.e. either public or private), the sector, the vulnerability in relation to the commodities or services involved, including their availability for the entire duration of the credit, the customers;

• — the legal structures, e.g. whether the mechanism is sufficiently immune against the influence of the obligor or its country;

• — the degree to which the technique remains subject to government interference, renewal or withdrawal;

• — whether the account would be sufficiently protected against project related risks;

• — the amount which will flow into the account and the mechanism for the continuation of appropriate provision;

• — the situation with regard to the Paris Club (e.g. possible exemption);

• — the possible impact of country risks other than the transfer risk;

• — the protection against the risks of the country where the account is located;

• — the contracts with the customers, including their nature and duration; and

- — the global amount of the expected foreign earnings in relation to the total amount of the credit.

Impact on the MPR

The application of this country risk mitigation technique may result in a one category improvement in the applicable country risk classification for the transaction, except for transactions in Country Risk Category 1.

2. Local Currency Financing

Definition:

Contract and financing negotiated in convertible and available local, other than hard, currencies and financed locally that eliminates or mitigates the transfer risk. The primary debt obligation in local currency would, in principle, not be affected by the occurrence of the first two country credit risks.

Criteria:

• — The ECA liability and claims payment or the payment to the Direct Lender are expressed/made throughout in local currency.

• — The ECA is normally not exposed to the transfer risk.

• — In the normal course of events, there will be no requirement for local currency deposits to be converted into hard currency.

• — The borrower’s repayment in its own currency and in its own country is a valid discharge of the loan obligation.

• — If a borrower’s income is in local currency the borrower is protected against adverse exchange rate movements.

- — Transfer regulations in the borrower’s country should not affect the borrower’s repayment obligations, which would remain in local currency.

Additional factors to be taken into consideration:

The technique applies on a selective basis in respect of convertible and transferable currencies, where the underlying economy is sound. The Participant ECA should be in a position to meet its obligations to pay claims expressed in its own currency in the event that the local currency becomes either ‘non-transferable’ or ‘non-convertible’ after the ECA takes on liability. (A Direct Lender would however carry this exposure.)

Impact on the MPR

The application of this risk mitigation technique may result in a discount of no more than 20 % to the country credit risk portion of the MPR (i.e. a local currency factor [LCF] with a value of no more than 0,2).

BUYER RISK CREDIT ENHANCEMENTS

The following table provides definitions of the buyer risk credit enhancements that may be applied, along with their maximum impact on the applicable MPRs. For transactions subject to country risk category 1-7 MPRs, the maximum CEF used in the MPR formula is stipulated; for market benchmark transactions, the maximum discount to the applicable Market Benchmark MPR is stipulated ([^E0048]).

| CREDIT ENHANCEMENT | DEFINITION | MAXIMUM CEF (COUNTRY RISK CATEGORY 1-7) | MAXIMUM DISCOUNT (MARKET BENCHMARK) |

| --- | --- | --- | --- | | Assignment of Contract Proceeds or Receivables | In the event a borrower has contracts with strong off-takers, whether offshore or local, a legally enforceable assignment of the contract provides rights to enforce the borrower’s contracts and/or make decisions under major contracts in the place of the borrower after a default under the loan. A direct agreement with a third party in a transaction (a local government agency in a mining or energy transaction) allows Lenders to approach a government to seek remedies for expropriation or other violation of contractual obligations related to the transaction. An existing company operating in a difficult market or sector may have receivables related to the sale of production with a company or companies located in a more stable environment. Receivables would generally be in a hard currency but may not be the subject of a specific contractual relationship. Assignment of these receivables could provide asset security in the accounts of the Borrower, giving the Lender a preferential treatment in the cash flow generated by the Borrower. | 0,10 | N/A | | Asset-Based Security | Control of an asset shown by: (1) mortgage on very mobile and valuable piece of property and (2) property that has entire value in itself. An asset-based security is one that can be reacquired with relative ease such as a locomotive, medical equipment or construction equipment. In valuing such a security, the ECA should take into consideration the legal ease of recovery. In other words, there is more value when the security interest in the asset is perfected under an established legal regime and less value where the legal ability to recover the asset is questionable. The precise value of an asset-based security is set by the market, with the relevant "market" being deeper than a local market because the asset can be moved to another jurisdiction. NOTE: The application of an asset-based security credit enhancement for transactions subject to country risk category 1-7 MPRs applies to the buyer risk, where the asset-based security is held internally within the country in which the transaction is domiciled. | 0,25 | 15 % | | Fixed Asset Security | A fixed asset security is most typically component equipment which may be constrained by its physicality such as turbine or manufacturing machinery integrated into an assembly line. The intent and value of the fixed asset security is to provide the ECA with more leverage over the use of the asset in recouping losses in the event of default. The value of a fixed asset security varies dependent on economic, legal, market and other factors. | 0,15 | 10 % | | Escrow Account | Escrow accounts involve debt service reserve accounts held as security for the lenders or other forms of cash receivable accounts held as security for the lenders by a party not controlled or sharing common ownership with the buyer/obligor. The escrowed amount must be deposited or escrowed in advance. The value of such security is nearly always 100 % of the nominal amount in such cash accounts. Permits greater control over use of cash, ensures that debt is serviced before discretionary spending. NOTE: The application of an escrow account credit enhancement for transactions subject to country risk category 1-7 MPRs applies to the buyer risk, where the escrow account is held internally within the country in which the transaction is domiciled. Cash security significantly diminishes the risk of default for the covered instalments. | escrowed amount as % of credit up to a maximum of 0,10 | escrowed amount as % of credit up to a maximum of 10 % |

ANNEX XI

CHECKLIST OF DEVELOPMENTAL QUALITY

CHECKLIST OF DEVELOPMENTAL QUALITY OF AID FINANCED PROJECTS

A number of criteria have been developed in recent years by the DAC to ensure that projects in developing countries that are financed totally or in part by Official Development Assistance (ODA) contribute to development. They are essentially contained in the:

• — DAC Principles for Project Appraisal, 1988;

• — DAC Guiding Principles for Associated Financing and Tied and Partially Untied Official Development Assistance, 1987; and

- — Good Procurement Practices for Official Development Assistance, 1986. Of these, the DAC Principles for Project Appraisal and the Good Procurement Practices for Official Development Assistance were, together with several other ‘principles’ or ‘good practices’ the DAC produced, published together in the Development Assistance Manual, DAC Principles for Effective Aid (DAM) in 1992.

CONSISTENCY OF THE PROJECT WITH THE RECIPIENT COUNTRY’S OVERALL INVESTMENT PRIORITIES (PROJECT SELECTION)

Is the project part of investment and public expenditure programmes already approved by the central financial and planning authorities of the recipient country?

(Specify policy document mentioning the project, e.g. public investment programme of the recipient country.)

Is the project being co-financed with an international development finance institution?

Does evidence exist that the project has been considered and rejected by an international development finance institution or another DAC Member on grounds of low developmental priority?

In the case of a private sector project, has it been approved by the government of the recipient country?

Is the project covered by an intergovernmental agreement providing for a broader range of aid activities by the donor in the recipient country?

PROJECT PREPARATION AND APPRAISAL

Has the project been prepared, designed and appraised against a set of standards and criteria broadly consistent with the DAC Principles for Project Appraisal from paragraphs 91-162 of the DAM? Relevant principles concern project appraisal under:

• a) Economic aspects (paragraphs 120 to 128 DAM).

• b) Technical aspects (paragraph 112 DAM).

• c) Financial aspects (paragraphs 113 to 119 DAM).

In the case of a revenue producing project, particularly if it is producing for a competitive market, has the concessionary element of the aid financing been passed on to the end-user of the funds? (paragraph 115 DAM).

• a) Institutional assessment (paragraphs 130 to 134 DAM).

• b) Social and distributional analysis (paragraphs 137 to 147 DAM).

- c) Environmental assessment (paragraphs 145 to 147 DAM).

PROCUREMENT PROCEDURES

What procurement mode will be used among the following? (For definitions, see Principles listed in Good Procurement Practices for ODA from paragraphs 409-429 of the DAM).

• a) International competitive bidding (paragraphs 411 and 419-429 DAM: Minimum conditions for effective international competitive bidding).

• b) National competitive bidding (paragraph 412 DAM).

• c) Informal competition or direct negotiations (paragraphs 413-414 DAM).

Is it envisaged to check price and quality of supplies (paragraph 153 DAM)?

ANNEX XII

COMMERCIAL INTEREST REFERENCE RATE (CIRR) PROVISIONS

SECTION 1

CONSTRUCTION OF THE CIRR

• 1.A CIRR shall be established for each Participant’s currency, provided that the required data is made available to the Secretariat. A Participant or a non-Participant may request that a CIRR be established for the currency of a non-Participant. In consultation with the interested non-Participant, a Participant or the Secretariat on behalf of that non-Participant may make a proposal for the construction of the CIRR in that currency.

• 2.Other Participants shall use the CIRR set for a particular currency should they decide to finance in that currency.

• 3.The CIRR is composed of a base rate and a margin.

- 4.The minimum CIRR for any currency shall be no lower than 15 basis points.

ESTABLISHMENT OF THE BASE RATE

• 5.CIRR rates shall be calculated monthly and will take effect on the 15^th day of each month.

• 6.CIRR base rates are computed using government bond yields.

• 7.The maturity of the government bond to be used for each transaction shall be determined according to the following formula: Drawdown Period + 0,5 Repayment Period + 0,5 Repayment Frequency in years ([^E0049]) (for standard repayment profiles). For transactions with a non-standard repayment profile, the following formula shall be applied: DP + [

Image omitted; see official source ] ([^E0050]). The result will be rounded to the nearest year, capped at 10 years and floored at three years.

• 8.Participants shall compute the bond yields using the arithmetic mean of all the daily yields of the 3, 4, 5, 6, 7, 8, 9 and 10-year government bonds of the previous calendar month for their respective currencies. Those yields shall be reported to the Secretariat no later than five days after the end of each month and shall be made publicly available on a monthly basis.

• 9.Participants may use linear interpolation in order to achieve the necessary yields as long as it is within the interpolation region of 2-year government bonds up to and including 15-year government bonds. Extrapolation to a lower or higher bond yield shall not be allowed.

- 10.In the event where the data for one or more of the necessary government bonds could not be obtained (according to Articles 8 and 9), there will be no CIRR in that currency for transactions requiring such maturities (Article 7 refers) unless the missing data concerns shorter maturities and data for higher maturities (up to 10 years) has been provided. In such event, the yields of the nearest higher government bond shall be used to compute the base rates requiring such shorter maturities.

ESTABLISHMENT OF THE MARGIN ([^E0051])

• 11.The margin shall be calculated on a quarterly basis (respectively on 15 January, 15 April, 15 July and 15 October of each year) according to the five-year swap spread yields (difference between the five-year government bond rate and the five-year swap rate).

• 12.The margin shall be computed using the following formula: 0,5 * (three-month average of daily five-year swap spread yields) + 80 basis points. The result shall be rounded to the nearest basis point and capped at a maximum of 120 basis points and floored at a minimum of 80 basis points.

• 13.The three-month average of the daily five-year swap spreads to be used shall be obtained by calculating the arithmetic mean of the daily five-year swap spread of the last three calendar months in the relevant currencies. They shall be reported to the Secretariat no later than five days after the end of each quarter.

• 14.In the event where the five-year swap spread is not available in the market for a given currency, the margin shall be set at 100 bps.

- 15.The resulting margins shall be made publicly available at the beginning of each quarter.

SECTION 2

APPLICATION OF THE CIRR

- 16.Where official financing support is provided for floating rate loans, banks and other financing institutions shall not be allowed to offer the option of the lower of either the CIRR (at time of the original contract) or the short-term market rate throughout the life of the loan.

VALIDITY PERIOD OF CIRR

• 17.A CIRR may be locked in before, at, or after the Date of Financial Contract (DFC).

• 18.In the case where a CIRR is locked in and held prior to DFC, the Holding Period shall not exceed 12 consecutive months ([^E0052]), the length of the Holding Period shall be decided at the latest at the Date of Quote (DoQ), and an additional spread shall be added to the applicable CIRR according to the table below:

Holding Period (in months)	Cost of Holding Period (basis points)
1 – 6	20
7	23
8	26
9	30
10	34
11	39
12	44

• 19.If the Holding Period lapses prior to the DFC, the CIRR rate may be reset immediately or at a later time and held for a new Holding Period. If the signature of the commercial contract (SCC) has occurred prior to the reset, the reset rate shall not be lower than the latest previously locked-in rate. There is no limit to the number of times a CIRR may be reset.

- 20.Any change in the Interest Accrual Period prior to or at DFC shall trigger a recalculation of the CIRR base rate. Such recalculation shall be based on the new Interest Accrual Period using the base rates in effect at the initial DoQ; it shall not be considered as a reset or a cancellation of the CIRR rate.

COMMITMENT FEE

• 21.A commitment fee shall be charged for direct credits. If the CIRR was locked in prior to or at DFC, the commitment fee shall be charged immediately following DFC. If the CIRR was locked in after DFC, then it shall be charged immediately following DoQ.

- 22.Participants shall charge a commitment fee at or above commercial market practices provided that such information is available.

VOLUNTARY CANCELLATION AND VOLUNTARY PREPAYMENT

• 23.If a CIRR rate is voluntarily cancelled, any subsequent CIRR rate that is quoted for the same transaction and the same exporter shall be no lower than the latest previously quoted CIRR.

• 24.Prior to DFC, there is no cost for cancelling a CIRR rate or switching to a floating rate.

- 25.Once the DFC has occurred and irrespective of when the CIRR was set, in the event of voluntary cancellation or voluntary prepayment of a loan or any portion thereof, the borrower shall compensate the government institution providing official support for all costs and losses incurred as a result of such early prepayment or voluntary cancellation. This includes the costs to the government institution of replacing the part of the expected fixed rate cash inflow interrupted by the early prepayment or voluntary cancellation.

SECTION 3

TRANSITIONAL AGREEMENTS

- 26.The provisions set out in this Annex shall come into force on 15 July 2023 for transactions committed from that date onwards.

ANNEX XIII

LIST OF DEFINITIONS

For the purpose of the Arrangement:

• a) Commitment: any statement, in whatever form, whereby the willingness or intention to provide official support is communicated to the recipient country, the buyer, the borrower, the exporter or the financial institution.

• b) Common Line: an understanding between the Participants to agree, for a given transaction or in special circumstances, on specific financial terms and conditions for official support. The rules of an agreed Common Line supersede the rules of the Arrangement only for the transaction or in the circumstances specified in the Common Line.

• c) Concessionality Level of Tied Aid: in the case of grants the concessionality level is 100 %. In the case of loans, the concessionality level is the difference between the nominal value of the loan and the discounted present value of the future debt service payments to be made by the borrower. This difference is expressed as a percentage of the nominal value of the loan.

• d) Date of Financial Contract (DFC): the date at which all parties to the Financial Contract are bound, taking into account any entailing legal obligations.

• e) Date of Quote (DoQ): the date at which a CIRR is locked-in.

• f) Decommissioning: closing down or dismantling of a nuclear power plant.

• g) Export Contract Value: the total amount to be paid by or on behalf of the purchaser for goods and/or services exported, i.e. excluding local costs as defined hereafter; in the case of a lease, it excludes the portion of the lease payment that is equivalent to interest.

• h) Final Commitment: for an export credit transaction (either in the form of a single transaction or a line of credit), a final commitment exists when the Participant commits to precise and complete financial terms and conditions, either through a reciprocal agreement or by a unilateral act.

• i) Holding Period: the period starting at DoQ and ending at DFC.

• j) Initial Fuel Load: the initial fuel load shall consist of no more than the initially installed nuclear core plus two subsequent reloads, together consisting of up to two-thirds of a nuclear core.

• k) Interest Accrual Period: the period during which interest accrues (i.e., from first disbursement until the last repayment of principal: drawdown period + repayment period).

• l) Interest Rate Support: an arrangement between a government and banks or other financial institutions which allows the provision of fixed rate export finance at or above the CIRR.

• m) Line of Credit: a framework, in whatever form, for export credits that covers a series of transactions which may or may not be linked to a specific project.

• n) Local Costs: expenditure for goods and services in the buyer’s country that are necessary either for executing the exporter’s contract or for completing the project of which the exporter’s contract forms a part. These exclude commission payable to the exporter’s agent in the buying country.

• o) Market Benchmark Transaction: transaction involving ultimate obligors/guarantors in Category 0 countries, High Income OECD countries and High Income Euro Area countries.

• p) Minimum Actuarial Premium: is the annualised average default rate (derived from cumulative default rates published by the main Accredited CRAs) for a given rating and total term (WAL of the whole transaction) adjusted by an assumed loss given default and a costs loading factor as per agreed conventions by the Participants.

• q) Name Specific Bond or CDS: a Name Specific Bond or CDS is limited to those market benchmark instruments that belong to the exact identical obligor/guarantor as in the transaction being supported.

• r) Pure Cover: official support provided by or on behalf of a government by way of export credit guarantee or insurance only, i.e. which does not benefit from official financing support.

• s) Related Entity: Related Entity references are benchmark instruments of a related borrower rather than the exact identical borrower in the supported transaction. In the case where the obligor has no quoted bonds or CDSs, and there exists within the obligor’s organisational structure a parent, subsidiary or sister company with Name Specific Bonds or CDSs outstanding in the market, then with regard to Article 21 c), those Name Specific Bonds or CDSs may be used as if they had been issued by the obligor itself if:
• 1. The parent, subsidiary, or sister company has the same issuer CRA rating as the obligor/guarantor; or
• 1. All of the following criteria are met:
• i. The Participant’s internal rating of the obligor/guarantor corresponds with the CRA rating of the related entity.
• ii. The obligor/guarantor is the main operating company of the parent/holding, being a key and integral part of the group’s business.
• iii. The CRA rating is based on the core business of the group.
• iv. The obligor/guarantor provides a significant part of the group’s earnings by providing either some of the group’s core products/services to core clients or it owns and operates a major portion of the parent’s assets.
• v. The sale of the obligor/guarantor from the group is very hard to conceive, and the disposal would significantly alter the overall shape of the group.
• vi. A default of the obligor/guarantor would constitute a huge reputational risk to the group, damage its franchise and could threaten its viability.
• vii. A high level of management and operational integration exists where capital and funding is typically provided by the parent company or a finance subsidiary via intercompany loans and where parent support is unquestioned.

• t) Repayment Term: the period beginning at the starting point of credit, as defined in this Annex, and ending on the contractual date of the final repayment of principal.

• u) Starting Point of Credit:
• 1. Parts or components (intermediate goods) including related services: in the case of parts or components, the starting point of credit is not later than the actual date of acceptance of the goods or the weighted mean date of acceptance of the goods (including services, if applicable) by the buyer or, for services, the date of the submission of the invoices to the client or acceptance of services by the client.
• 1. Quasi-capital goods, including related services – machinery or equipment, generally of relatively low unit value, intended to be used in an industrial process or for productive or commercial use: in the case of quasi-capital goods, the starting point of credit is not later than the actual date of acceptance of the goods or the weighted mean date of acceptance of the goods by the buyer or, if the exporter has responsibilities for commissioning, then the latest starting point is at commissioning, or for services, the date of the submission of the invoices to the client or acceptance of the service by the client. In the case of a contract for the supply of services where the supplier has responsibility for commissioning, the latest starting point is commissioning.
• 1. Capital goods and project services – machinery or equipment of high value intended to be used in an industrial process or for productive or commercial use:
• — In the case of a contract for the sale of capital goods consisting of individual items usable in themselves, the latest starting point is the actual date when the buyer takes physical possession of the goods, or the weighted mean date when the buyer takes physical possession of the goods.
• — In the case of a contract for the sale of capital equipment for complete plant or factories where the supplier has no responsibility for commissioning, the latest starting point is the date at which the buyer is to take physical possession of the entire equipment (excluding spare parts) supplied under the contract.
• — If the exporter has responsibility for commissioning, the latest starting point is at commissioning.
• — For services, the latest starting point of credit is the date of the submission of the invoices to the client or acceptance of service by the client. In the case of a contract for the supply of services where the supplier has responsibility for commissioning, the latest starting point is commissioning.
• 1. Complete plants or factories – complete productive units of high value requiring the use of capital goods:
• — In the case of a contract for the sale of capital equipment for complete plant or factories where the supplier has no responsibility for commissioning, the latest starting point of credit is the date when the buyer takes physical possession of the entire equipment (excluding spare parts) supplied under the contract.
• — In case of construction contracts where the contractor has no responsibility for commissioning, the latest starting point is the date when construction has been completed.
• — In the case of any contract where the supplier or contractor has a contractual responsibility for commissioning, the latest starting point is the date when it has completed installation or construction and preliminary tests to ensure it is ready for operation. This applies whether or not it is handed over to the buyer at that time in accordance with the terms of the contract and irrespective of any continuing commitment which the supplier or contractor may have, e.g. for guaranteeing its effective functioning or training local personnel.
• — Where the contract involves the separate execution of individual parts of a project, the date of the latest starting point is the date of the starting point for each separate part, or the mean date of those starting points, or, where the supplier has a contract, not for the whole project but for an essential part of it, the starting point may be that appropriate to the project as a whole.
• — For services, the latest starting point of credit is the date of the submission of the invoices to the client or the acceptance of service by the client. In the case of a contract for the supply of services where the supplier has responsibility for commissioning, the latest starting point is commissioning.

• v) Tied Aid: aid which is in effect (in law or in fact) tied to the procurement of goods and/or services from the donor country and/or a restricted number of countries; it includes loans, grants or associated financing packages with a concessionality level greater than zero percent. This definition applies whether the ‘tying’ is by formal agreement or by any form of informal understanding between the recipient and the donor country, or whether a package includes components from the forms set out in Article 30 of the Arrangement that are not freely and fully available to finance procurement from the recipient country, substantially all other developing countries and from the Participants, or if it involves practices that the DAC or the Participants consider equivalent to such tying.

• w) Untied Aid: aid which includes loans or grants whose proceeds are fully and freely available to finance procurement from any country.

• x) Weighted Average Life of the Repayment Period: the time that it takes to retire one-half of the principal of a credit. This is calculated as the sum of time (in years) between the starting point of credit and each principal repayment weighted by the portion of principal repaid at each repayment date.

[^E0001]: As defined in Article 5 of the OECD Convention.

[^E0002]: Defined by the World Bank on an annual basis according to per capita GNI.

[^E0003]: For the purposes of the Arrangement, the term ‘power plant’ comprises complete power plants or parts thereof, including all components, equipment, materials and services (including the training of personnel) directly required for the construction and commissioning of the plant. This does not include items for which the buyer is usually responsible, in particular costs associated with land development, roads, construction villages, power lines, and switchyard and water supply located outside the power plant site boundary, as well as costs arising in the buyer’s country from official approval procedures (e.g. site permits, construction permit, fuel loading permits).

[^E0004]: The status of a country in terms of: (1) whether it is a High Income country (as defined by the World Bank on an annual basis according to per capita GNI), (2) membership in the OECD and (3) whether it is part of the Euro Area is reviewed on an annual basis. The designation of a country under Article 21 c) as a High Income OECD country or a High Income Euro Area country as well as the removal of such designation will only come into effect after the country’s income classification (High Income or otherwise) has remained unchanged for two consecutive years. A change in a country’s designation as a High Income OECD country or a High Income Euro Area country as well as the removal of such designation related to a change in OECD membership or being part of the Euro Area will come into effect immediately at the time of the annual review of countries’ status.

[^E0005]: The assessment of whether or not a Multilateral or Regional Institution is generally exempt from the monetary control and transfer regulations of the country in which it is located shall be made based on the criteria set out in Annex VIII, The Participants shall maintain a list of the institutions deemed as meeting the criteria and, therefore, subject to the premium rates for Market Benchmark Transactions.

[^E0006]: To qualify as an asset-backed transaction, there must be a first priority security interest on the asset being financed; and, in the case of a lease structure, assignment and/or a first priority security interest in connection with the lease payments.

[^E0007]: To qualify as a project finance transaction, the transaction must involve the export of goods or services to an independent (legally and economically) project company whereby, (1) the cashflows and earnings of the project company are considered by the lender to be the source of funds from which a loan will be repaid and (2) the assets of the project company are considered by the lender to be collateral for the loan.

[^E0008]: This portion of the 25 % criterion may be met where the non-cash payment portion of a transaction involving a single bank receiving ECA cover includes an uncovered portion of at least 25 %. Such transactions must meet all of the other criteria of subparagraph 1, including the pari passu provisions of this tiret.

[^E0009]: Where the obligor/guarantor is rated by more than one Accredited CRA, the CRA rating is the best available foreign currency rating on a senior unsecured basis for the obligor (or guarantor). The Secretariat shall compile and maintain a list of such accredited CRAs.

[^E0010]: In the event that a relevant Name-Specific market pricing entity is not rated by an Accredited CRA, then the resulting market pricing shall be considered to be below the corresponding TCMB rate and be subject to prior notification in accordance with Article 44.

[^E0011]: The premium rates charged for transactions with a third party guarantee provided by an obligor in a Category 0 country, High Income OECD country, High Income Euro Area country, or by a multilateral or regional institution deemed as meeting the criteria set out in Annex VIII are subject to the requirements set out in Article 21 c).

[^E0012]: In the case of a third party guarantee, the applicable country risk classification and buyer risk category must be related to the same entity, i.e. either the obligor or the guarantor.

[^E0013]: For administrative purposes, some countries that are eligible to be classified into one of the eight Country Risk Categories may not be classified if they do not generally receive officially supported export credits. For such non-classified countries, Participants are free to apply the country risk classification which they deem appropriate.

[^E0014]: Rules related to the classification of buyers should be understood to stipulate the most favourable classification that can be applied, e.g. a sovereign buyer may be classified in a less favourable buyer risk classification.

[^E0015]: The MPRs associated with the Better than Sovereign (SOV+) buyer risk category are 10 % lower than the MPRs associated with the Sovereign (CC0) buyer risk category.

[^E0016]: Where the non-sovereign borrower is rated by more than one accredited CRA, notification is only required where the buyer risk rating is more favourable than the most favourable of the CRA ratings.

[^E0017]: Based on the annual review by the World Bank of its country classification, a per capita Gross National Income (GNI) threshold will be used for the purpose of tied aid eligibility; such threshold is available on the OECD website (https://www.oecd.org/trade/topics/export-credits/arrangement-and-sector-understandings/financing-terms-and-conditions/).

[^E0018]: With new CIRR rules having been agreed, the calculation of the DDR according to the approach provided in Article 36 a) is temporary pending further discussions by the Participants.

[^E0029]: However, in cases where the buyer of the switchyard is the same as the buyer of the power plant and the contract is concluded in relation to the original switchyard for that power plant, the terms and conditions for the original switchyard shall not be more generous than those for the nuclear power plant.

[^E0030]: Ex-ante semi-annual repayment reporting requirement does not apply to small aircraft transactions with a total financed amount of less than USD 5 million (i.e., de minimis transactions).

[^E0031]: An explanation shall be provided where the proposed risk-rating of a buyer/borrower exceeds the risk rating of the host sovereign.

[^E0032]: For transactions with an export contract value of less than USD 5 million, a Participant not wishing to follow the risk classification procedure set out in Articles 6 to 8 of this Appendix shall apply the risk classification ‘8’ for the buyer/borrower which is the subject of the transaction and shall notify the transaction in accordance with Article 24 a) of this Sector Understanding.

[^E0033]: For transactions with an export contract value of less than USD 5 million, a five working-day period shall apply.

[^E0034]: Together with information regarding any involvement (provided with due respect for confidentiality duties).

[^E0035]: Together with information regarding any involvement (provided with due respect for confidentiality duties).

[^E0036]: For the purposes of this questionnaire the ‘State’ is the country that is being proposed for addition to the Cape Town Convention List under Appendix II, Section 2 II of the ASU. Where appropriate, these questions shall also be answered in respect of the laws of the particular ‘territorial unit’ of the State in which the relevant operator of an aircraft [or other relevant body as set out in Article 35 (b) Appendix II] is located and ‘national law’ shall be read as including a reference to the relevant local law.