Loans for Overseas Contracted Projects

Introduction 

Loans for overseas contracted projects refer to the local- and foreign-currency loans provided by the Bank to meet the funding needs of enterprises undertaking foreign contracted projects. 

Targets 

It is targeted at Chinese and foreign borrowers. 

Chinese borrowers refer to the enterprises registered with the administrative bureaus of industry and commerce of China and having an independent legal capacity and qualification for contracting overseas projects stipulated in the Administrative Regulation on Contracting Foreign Projects, Order No. 527 of the State Council as well as Measures for the Administration of the Qualification for 

Contracting Foreign Projects (Order No. 9 [2009] of the Ministry of Commerce and the Ministry of Housing and Urban-Rural Development). In addition, it also includes Chinese enterprises or Chinese-controlled enterprises, which are registered overseas and meet the qualification requirements of the laws and regulations of the country or region where the project is located. 

Foreign borrowers refer to overseas financial institutions, finance ministry or institutions authorized by the government of the importing country, and other overseas business owners. The contractors of overseas projects for which the Bank provides loans to foreign borrowers shall be independent business entities in China. Alternatively, they can be overseas subsidiaries controlled or invested by such entities (having a shareholding ratio of no less than 30% or relative control) or other joint ventures of such entities. 

Application Conditions 

A Chinese borrower that applies for the loan to the Bank as a general contractor shall meet the following conditions: 

1. A domestic general contractor shall have the qualification for contracting overseas projects as stipulated in the Administrative Regulation on Contracting Foreign Projects, Order No. 527 of the State Council of China, and Measures for the Administration of the Qualification for Contracting Foreign Projects (Order No. 9 [2009] of the Ministry of Commerce and the Ministry of Housing and Urban-Rural Development). An overseas general contractor shall have relevant qualifications. 

2. The borrower must have viable operational management and financial conditions, good credit standing, and the ability to repay the loan principal and the interest accrued thereon. 

3. If the Bank’s existing measures are adopted for credit rating, the borrower’s credit rating with the Bank shall normally be above BB (inclusive). In the case of application for consolidated working capital loans under multiple business contracts, the borrower’s credit rating with the Bank shall normally be above BBB (inclusive). Moreover, the required credit rating of the borrower can be relaxed to BB if it has full guarantee from banks or strategic customers, or it is guaranteed by highly-liquid collateral/pledges. 

4. Relevant business contracts for overseas contracting projects must have been signed. They should also have obtained approval from the competent authorities of China when necessary. 

5. The ratio of the total amount of China-made equipment, materials and technologies, and relevant services (including labor, management, design, audit, and consulting) exported under an overseas contracting project shall not be less than 15% of the total amount of the project contract. 

6. The amount of a business contract for an overseas construction project (or the total amount of multiple business contracts consolidated for loan application) shall not be less than USD1 million. In addition, the ratio of advance payment for relevant projects shall be not less than 15%. Where the ratio of advance payment fails to meet the aforementioned requirement, the Bank shall make analysis and judgment based on the credibility of the project owner or payer, performance capability of the borrower, and the way of guarantee. 

7. The relevant projects must have good economic and social returns. 

8. The project owner or payer must have corresponding economic strength and a good credit standing. 

9. The economic and political situations of the country where the project is located should be relatively stable. 

10. Export credit insurance shall be purchased when necessary. 

11. A repayment guarantee recognized by the Bank should be provided (if necessary). 

12. Other conditions as deemed necessary by the Bank shall apply. 

A foreign borrower that applies to the Bank for the loan for overseas contracted projects shall meet the following conditions: 

1. The economic and political situations of the country where the borrower is located must be relatively stable, or the country-specific risks should be under control. 

2. The borrower must have a good credit standing and the ability to repay the loan principal and the interest accrued thereon. 

3. If the Bank’s existing measures are adopted for credit rating, the borrower’s credit rating with the Bank shall normally be above BB (inclusive). The credit rating of sovereign borrowers shall normally be above B (inclusive) (sovereign loans or sovereign guaranteed loans covered by the export credit insurance of China Export and Credit Insurance Corporation are not subject to the rating-based access requirements). 

4. The ratio of the total amount of Chinese equipment, construction machinery, materials, project construction, and technical, management and labor services exported under an overseas contracting project shall normally account for no less than 15% of the contract amount. 

5. The borrower shall provide a repayment guarantee recognized by the Bank (if necessary). 

6. Export credit insurance shall be purchased, as deemed necessary by the Bank. 

7. In cases where the borrower is a multilateral financial institution and has member(s) with no diplomatic ties with China, the borrower shall obtain the consent of the Bank before application. 

8. In cases where the borrower is an overseas financial institution, its credit record information must be obtainable from Banker Almanac, Bank Scope, Moody’s KMV, and other professional channels. 

9. Other conditions as deemed necessary by the Bank shall apply.