Questions_and_Answers_9-26-16.pdf

1. Is the response due date going to be extended?

Answer: Yes. Proposal due date now extended to October 12, 2016 at 12:00 Noon

2. The aviation portfolio comprises $42.5bn of exposure over 95 loans to 73 borrowers of which $1bn is to be transferred under the pilot program. What factors are your primary concern? Cost, risk transfer, spread or concentration? Each choice leads us to propose a specific pilot program structure so it is important we know your objectives.

a. If it is cost, is the objective to transfer the maximum amount of exposure at the cheapest possible price?

b. If it is credit quality, is the focus on transferring the poorly-rated borrowers?

c. If spread is the objective, is the aim to transfer a portion of exposure to as many borrowers as possible?

d. If the concentration is the issue, should we aim to transfer exposure to the largest borrowers?

Answer: The aggregate amount of liability the Bank may transfer through risk-sharing pursuant to a contract or other arrangement entered into under the Bank’s Charter may not exceed $1,000,000,000. Further, in the Bank’s Charter if the Bank’s default rate goes above 2 percent the Bank may not exceed the amount of loans, guarantees, and insurance outstanding on the last day of that quarter until the rate calculated under section 8(g)(1) is less than 2 percent. In light of these, a balance between cost, risk and concentration is desired along with having risk sharing paid for by the Bank upfront and risk sharing to pay the Bank at time of default prior to recoveries being collected (recoveries may subsequently be shared as the come in depending on the structure).

3. If cost is the principal concern will EXIM consider an excess of loss structure and if so at what level of first loss retention are you comfortable with?

Answer: An excess of loss structure would be considered by the Bank at various levels of first loss retention.

4. How is the pilot program to be understood: as a single risk transfer program that can be scaled-up, or as just one of several different programs required to achieve the objective?

Answer: The pilot program carried out under the Bank’s Charter terminates on September 30, 2019.

5. Statement of Work, Section 4. Deliverables, 4.1 Risk Sharing Structure(s) Refinement:

EXIM Bank requests the Contractor to conduct a thorough analytical modeling exercise…

a. Question: For the purposes of our RFP response, are you asking for a conceptual response to this requirement or to model with data made available upon signing the NDA?

Answer: Conceptual responses informed by the type of transactions EXIM has in its portfolio (either through the data provided in the NDA or other publicly available data).

Signing the NDA and using the data in the proposal is not a requirement.

6. Solicitation, Section I Contract Clauses: There are a significant number of clauses that are not standard to the financial services industry

a. Question: For the purpose of the pilot program, will EXIM Bank refine the list to only those most necessary?

Answer: The list will be reviewed prior to contract award to only include clauses that are applicable.

b. Question: If EXIM Bank will not refine the list; will you agree to hold review/commitment to the clause upon award? This may be the intent of Section H.7, but we would like to clarify.

Answer: The awardee(s) will get a chance to review the contract and all contract clauses prior to award – generally clauses that are deemed inapplicable should be brought to the attention of the contracting officer during the review period. The post award conference reference in section H.7 generally happens after the contract is signed.

7. Solicitation, Section L, Proposal Submission L.7: The submission timeframe is October 6, 2016 by 12:00pm EDT.

a. Question: Will EXIM Bank grant a 10 business day extension so that our organization may provide more significant incremental analysis based on the data outlined in Section L.6 Data Set Request?

Answer: All proposals must be received by 12pm Eastern Daylight Time (EDT) on October 6, 2016.

8. Solicitation, Section B, Article B.1: EXIM Bank plans to enter into a multiple award no cost contract…

a. Question: Does EXIM Bank plan to select multiple providers for the pilot? If so, what is the number of providers and volume that will be shared?

Answer: This is a multiple award contract and the Bank anticipates issuing more than one (1) contract.

12. Non-Disclosure Agreement (NDA)

a. Question: Is the NDA only applicable to the information provided during the RFP process; specifically Section L.6 Data Set Request? If so, will a separate NDA be required upon award of the contract?

Answer: The NDA is only applicable to the information provided for the solicitation; a separate NDA will be required upon award.

13. Will EXIM accept two separate proposals from a bank bidder: one joint proposal with a reinsurance broker and a separate individual proposal (with no partner)?

Answer: Yes

14. Does EXIM have any minimum target requirements regarding specific credits or jurisdictions in its portfolio?

Answer: The aggregate amount of liability the Bank may transfer through risk-sharing pursuant to a contract or other arrangement entered into under the Bank’s Charter may not exceed $1,000,000,000. Further, in the Bank’s Charter if the Bank’s default rate goes above 2 percent the Bank may not exceed the amount of loans, guarantees, and insurance outstanding on the last day of that quarter until the rate calculated under section 8(g)(1) is less than 2 percent.

15. Does EXIM have a minimum transaction/reinsurance size target?

Answer: No

16. Has EXIM established a specific criteria or metric set against which it will measure any analytical results in order to determine whether or not a specific proposal satisfies its objective of cost effective risk sharing? If so, is EXIM able to share these criteria at this stage?

17. Please expand on how EXIM contemplates determining a fee structure with the

Contractor.

Answer: Under Factor 1 of the Evaluation Factors for award the offerors are to include an estimated range of potential costs associated with each structure proposed, which would include how and in what form the offeror would be compensated

18. Please may you explain how ‘cross-collateralization’ exactly works in the event of default? And, what is the contractual and/or legal ability of EXIM to repossess Aircraft?

Answer: Cross-collateralization means that if a borrower defaults on any one transaction the Bank has the right to repossess all aircraft that the borrower is financing through the Bank

19. In the document entitled “EXIM Aircraft Dataset for Reinsurance”, if we sum the column ‘Disbursed Amount’, would that be the denominator of the Default Rate calculation? If not, how do you calculate the denominator of the Default Rate?

Answer: Yes

20. What is the expected Default Rate of the ‘In Force’ Aircraft Portfolio?

Answer: Since FY 1994 on its aircraft portfolio total claims paid by the Bank have been $0.6 billion with total recoveries of $0.8 billion.

21. With respect to other parts of EXIM’s overall portfolio, what are the expected Default Rates? (Some insight on this may help in structural considerations around the aircraft portfolio and EXIM’s overarching goal of not exceeding a 2% default rate.)

Answer: At the end of FY 2015, the Bank’s default rate was 0.235%

22. Have you clarified with your legal department whether the Export Import Bank of the U.S. can issue debt in bond format?

Answer: No. EXIM cannot issue debt in bond format to private entities

a. If so, would this debt be exempt from registration under the Securities Act of 1933?

Answer: N/A

23. Does the Export-Import Bank of the U.S. have the capacity to form special purpose vehicles (SPVs)?

Answer: EXIM participates and uses SPVs for many transactions, but EXIM cannot be the owner or incorporator of an SPV.

24. Can the risk-sharing contract take the form of an unfunded derivative contract governed by International Swaps and Derivatives Association (ISDA) documentation?

Answer: We are not familiar with these forms and would have to review the specific form in question at the appropriate time. In general, the Bank can enter into any kind of commercial contract, but may not agree to certain provisions which may otherwise be common such as indemnification agreements, arbitration provisions, attorney’s fees provisions and others.

25. Does EXIM have a preliminary view on a preferred form of execution – reinsurance contract, capital markets, combination?

Answer: No. EXIM does not have a preferred form of execution.

26. Besides cost-efficiency and an economic transfer of risk, are there other key variables that EXIM is solving for through a contemplated transaction?

Answer: The aggregate amount of liability the Bank may transfer through risk-sharing pursuant to a contract or other arrangement entered into under the Bank’s Charter may not exceed $1,000,000,000. Further, in the Bank’s Charter if the Bank’s default rate goes above 2 percent the Bank may not exceed the amount of loans, guarantees, and insurance outstanding on the last day of that quarter until the rate calculated under section 8(g)(1) is less than 2 percent. In light of these, a balance between cost, risk and concentration is desired along with having risk sharing paid for by the Bank upfront and risk sharing to pay the Bank at time of default prior to recoveries being collected (recoveries may subsequently be shared as the come in depending on the structure).

27. What is the likelihood that EXIM would award an advisory contract to more than one bank, or bring another bank into a capital markets transaction after the initial contract is awarded (i.e., additional placement agents, etc.)?

Answer: Awarding to more than one bank is more likely than bringing another bank into a transaction after award

28. What are EXIM’s time-line expectations post- award of the contract with regard to both expectations of the Contractor and expectations of EXIM’s own decision process?

Answer: This is a pilot program and as such the Bank will be taking all steps necessary to prudently execute the program while responding as promptly as possible when needed.

29. Is any approval required outside of EXIM for the execution of a contemplated transaction? If so, what is the nature of such outside approval?

30. Does the provided dataset represent the entire EXIM aviation portfolio? If not, on what basis did EXIM determine this subset?

Answer: The NDA sample data includes data related to commercial aviation

31. Would EXIM please clarify the requirements in the “Technical Proposal” and “Past

Performance” submission documents vis-a-vis factors 1-4 listed under Section M.1.2 “Evaluation Factors for Award” in the document “Solicitation for Reinsurance Requirement”?

Answer: The Technical Proposal could address factors 1-3 with the Past Performance addressing factor 4.

32. Are there any specific requirements not outlined in the solicitation documents necessary for a proposal to be compliant with this type of “no cost contract”?

33. Please confirm if EXIM expects to pay major transaction costs (i.e., legal fees of bank or insurer, etc.).

Answer: The Bank anticipates that it will pay appropriate costs in executing potential risk sharing agreements, but not for costs incurred by the contractor prior to executing a risk sharing agreement.

34. For the NDA dataset please explain what the columns are (ie Market Value, Exposure, Authorized Amt, Disbursed Amt)?

Answer: The authorized amount is the amount of financing approved, the exposure amount it the sum of the undisbursed exposure (undisbursed funds available less cancelations) and outstanding exposure (disbursed funds less repayments). Undisbursed exposure and outstanding exposure may be referred to as amount outstanding or amount undisbursed. The market value uses IBA aircraft values.