Overseas Private Investment Corporation (OPIC)

 

Institution type Investment agency
Ownership 100% state-owned, the Corporation is governed by a 15-member Board of Directors, of whom eight are appointed from private sector and seven from the Federal government
Head office 1100 New York Avenue, NW, Washington, DC 20527-0001, USA
Rating (implicit) US Government Moody’s Aaa, S&P AAA, Fitchs AAA
Major instruments  Political risk insurance, loans and loan guarantees
Information  www.opic.gov
Email: alison.germak@opic.gov
Tel: +1 202 336 8400
Contact Person: Alison Germak, Director, Corporate Development
Summary

Founded in 1971, Overseas Private Investment Corporation (OPIC) is the US government development finance institution. Since its inception, OPIC has supported more than $200 billion of investments in emerging markets.

OPIC is a member of Berne Union that promotes American private sector’s investments in projects related for instance to infrastructure, power, food, health or access to finance in developing or post conflict countries.

In order to do so, OPIC supports investors and projects by providing financial products including loans, loan guarantees, and political risk insurance. OPIC can also provide assistance in the creation of private investment funds in emerging countries.

List of OPIC products :

  • Direct loans
  • Loans funded by OPIC Investment Guaranties to U.S. capital markets investors
  • Investment Guaranties to Third Party Lenders
  • Political Risk Insurance

 

Example of relevant products for private infrastructure investments
Instrument Political Risk Insurance (PRI)
Instrument type  Insurance
Eligible investments, borrowers, and projects U.S. investors, lenders, contractors, exporters, and NGOs investing in eligible developing countries1 in a form of new ventures, expansions of existing enterprises, privatisations and acquisitions with positive developmental benefits
Eligible beneficiaries • U.S. citizens;
• Corporations, partnerships or other associations created under the laws of the United States, its states or territories, and beneficially owned by U.S. citizens;
• Foreign corporations that are more than 95% owned by investors eligible under the above criteria; and
• Other foreign entities that are 100% U.S.-owned
Eligible forms of investment Equity investments, parent company and third-party loans and loan guarantees, technical assistance agreements, cross-border leases, consigned inventory or equipment and other forms of investment, contractors and exporters’ exposures
Risk types covered Political Risk :
• Currency Inconvertibility
• Expropriation and other forms of unlawful government interference (including creeping expropriation)
• Political Violence, war
• Specialty products: contractors and exporters; institutional loans; capital markets; breach of contract; non-honouring of a sovereign guarantee; reinsurance; natural resources (excluding oil and gas); leasing
Maximum tenor • Equity coverage: 20 years
• Loans, leases and transactions: equal to the duration of the underlying contract or agreement
Maximum amount or cover2 • Ability to cover up to $250 million per project
• 90% of eligible investment
• 180% to cover future earnings
• 100% of principal and interest for loans and capital leases from financial institutions to unrelated third parties
Other conditions • Insurance rates may fall outside of the rages shown in the table above, depending on the particular risk profile of the project
• The ranges shown also could be adjusted and affect rates for potential insurance contracts. However, once an insurance contract is executed, the rates in that contract are fixed for the contract’s term.
• OPIC insurance may not be available for certain coverage, or there may be limitations for underwriting or other reasons. Investors should consult the country list page regarding availability in particular countries.
• Investors must comply with U.S. economic environmental, worker rights, and anticorruption practices
Instrument Investment Guaranties to  Third Party Lenders
Instrument type Loan guarantees
Eligible investments, borrowers, and projects Projects or transactions in eligible countries that are commercially and financially sound, and are within demonstrated competence of proposed management, which has a proven success record and a significant financial risk in project
Eligible beneficiaries Guarantees are issued to US or host country financial institutions. OPIC expects the U.S. participation in the underlying investment to be the value equivalent of at least 25% of the equity of the project
Eligible forms of investment  Loans, guarantees (parent company and third-party loans)
Risk types covered Default on borrower payment for any reason
Maximum tenor Tailored to the economics and financials of the investment, and may exceed 15 years in the case of infrastructure and power projects
Maximum amount or cover3 OPIC generally will not support more than 75 percent of the total investment or $250 million per project.
Fee4 The base interest rate (usually a US Treasury-based rate) and any administrative spread are negotiated between the TPL and the Borrower. OPIC adds a risk premium called a Guaranty Fee to the base rate.
Other conditions A host country guarantee is normally not required for a loan guarantee. Investors must comply with U.S. economic environmental, worker rights, and anticorruption practices

1 For the full list of the countries see: http://www.opic.gov/doing-business-us/OPIC-policies/where-we-operate
2 Coverage amounts may be limited for investments in countries where OPIC has a high portfolio concentration
3 Coverage amounts may be limited for investments in countries where OPIC has a high portfolio concentration
4 Investors should contact OPIC directly for information on pricing for Non-Honouring of a Sovereign Guarantee and Oil and Gas Coverage http://www.unep.org/GC/GCSS-VIII/USA-Sanitation-2.pdf