What Is the Private Export Funding Corporation?
The Private Export Funding Corporation (PEFCO) is a private sector source of funding for financing exports from the United States. It was formed by a group of commercial banks with the support of the United States Export‐Import Bank (Ex-Im Bank). It provides a broad range of export finance programs, both as a direct lender and as a buyer in the secondary market of export loans originated by other lenders. In order to be eligible for financing by PEFCO, loans must be guaranteed against non-payment by the Ex-Im Bank.
Understanding the Private Export Funding Corporation (PEFCO)
The Private Export Funding Corporation (PEFCO) was incorporated in April 1970; its establishment was supported by the U.S. Treasury and the Ex-Im Bank. Its shareholders comprise commercial banks involved in export financing (these hold the majority of its shares), companies that export U.S. goods and services, and financial services companies.
Its primary business is making loans to foreign importers to finance their purchases of U.S. goods and services, and it aims to supplement (not compete with) the financing available through the Ex-Im Bank, commercial banks and other institutions. Its lending activities mirror the insurance activities of the Ex-Im Bank: in other words, there is a PEFCO loan type available to match almost every insurance or guarantee offering by the Ex-Im Bank. Short-, medium- and long-term funding is all available, but there will be different characteristics attached to each maturity type of funding.
Because all loans extended by PEFCO are guaranteed by the Ex-Im Bank or other U.S. government institutions backed by the full faith and credit of the United States, PEFCO relies upon this and does not make its own evaluations of credit risks, appraisals of economic conditions in foreign countries or reviews of other factors in making its loans.
As of 30 June 2017, PEFCO had assets of $7.6bn. This had fallen by $1bn over the preceding year, as a result of the fact that the Ex-Im Bank does not currently have a quorum of board members and therefore can not authorize transactions above a certain amount; the consequent limitations on what it can guarantee has negatively impacted on the transaction volume that PEFCO is able to undertake. This resulted in PEFCO's new loan commitments falling to $165m in 2017, from $292m in 2016. PEFCO has stated that it is aware of a number of viable transactions awaiting review that it has the capacity to commit to once the Ex-Im Bank board issues are resolved and Ex-Im can start guaranteeing in size again.