overseas private investment corporation › presentations › 2015 › 12-feeney_opic.pdf ·...
TRANSCRIPT
-
Overseas Private Investment Corporation
March 2015
Government Investment Officers
Association Conference
Stephen M. Feeney, Managing Director – Capital Markets
The U.S. Government's Development Finance Institution 1
-
What is OPIC?
The U.S. Government's Development Finance Institution 2
• US Government Agency established in 1971 by the Foreign Assistance Act
• US Government’s Development Finance Institution
• For Profit, Self-Sustaining US Government Agency
Operates at no Cost to the US Taxpayer
Net positive cash flows annually to the US Treasury
• Total Capital and Reserves Exceeding $4.5 Billion
• Independent Board of Directors Appointed by POTUS
-
What is OPIC? - Objectives
The U.S. Government's Development Finance Institution 3
Catalyze Emerging Market Development
Support US Private Sector Investment in Emerging Markets
Generate Self-Sustaining Financial Returns for OPIC
-
What is OPIC? - Four Businesses:
The U.S. Government's Development Finance Institution 4
1. Project/Structured Finance
2. Small Business Lending
3. Political Risk Insurance
4. Investment Funds71%
17%
12%
% of OPIC's $18 Billion Portfolio
Investment Funds
Political RiskInsurance
Project/StructuredFinance + SmallBusiness Lending
-
OPIC Impact
• Over $200 Billion Capital Committed
• More Than 4,000 Projects Financed
• Active Projects Support Over 250,000 Local Jobs
• Open in 150+ Emerging Economies
• Projects Active in 101 of the 150+ Countries
• Significant Economic, Labor and Environmental Policy Standards
The U.S. Government's Development Finance Institution 5
Since Inception
Current Profile
-
OPIC Financing
The U.S. Government's Development Finance Institution 6
Requires US Ownership Stake and
Equity Capital
Strong Credit and
Underwriting Criteria
Secured by Collateral
OPIC = Senior Secured Lender
$250 Million Maximum
Loan Commitment
-
OPIC Portfolio – Regionally Balanced
The U.S. Government's Development Finance Institution 7
$2.9 Billion
$2.7 Billion
$5.1 Billion
$3.9 Billion
$3.1 Billion
Europe and Eurasia Asia and the Pacific Latin America and the Caribbean
Sub-Saharan Africa North Africa/Middle East
-
OPIC Portfolio – Sectorally Diverse
The U.S. Government's Development Finance Institution 8
-
OPIC Funding - Certificates of Participation: “COPs”
The U.S. Government's Development Finance Institution 9
Backed by the Full Faith and Credit Guarantyof the United States of America
Trade at a Yield Premium to US Treasury Bills, Notes, and Bonds
Available only to US Eligible Investors
-
OPIC Funding - COPs Structure
The U.S. Government's Development Finance Institution 10
CollateralGuaranty
P-Note
Loan
COPs
100%
$ $
Placement Agent
US Equity Sponsor
OPIC Borrower
-
OPIC Funding - COPs Features
The U.S. Government's Development Finance Institution 11
Full Faith and Credit Guaranty of the United States of America
Each Transaction Supports a Discrete Asset
Singular and Specific Use of Proceeds – Not an Asset Basket/Pool–
Investors Earn Spreads Above US Treasury Yields for US Government Risk When Comparing Similar Structures and Like Maturities
Generally Small Offerings ($30 Million to $50 Million)• Prudent Lending Discipline• Discerning Underwriting Standards
-
OPIC Funding - COPs Flavors
The U.S. Government's Development Finance Institution 12
• Fixed Rate • Current-Pay Interest• Defined Principal Amortization – Similar to Sinking Fund• Pricing Base = US Treasury Notes/Bonds
• Fixed Rate• Interest Accrues, Accretes and Compounds - Paid at Final Maturity • No Principal Amortization - Bullet-Maturity Including Interest• Elements of Zero-Coupon Structure• Pricing Base = US Treasury STRIPs
• Floating Rate – Weekly Rate Reset• Current–Pay Interest• Defined Principal Amortization• Investor Tender/Put Option = Substantial 7-Day Liquidity• Pricing Base = US Treasury Bills
-
OPIC Funding - COPs Market Spread
Periodic Amortization – Reinvestment Risk in Certain Structures
The U.S. Government's Development Finance Institution 13
Unpredictable Issuance Profile• No Quarterly Market Entrances• Offerings only when Individual OPIC Deals Require Funding
Small Issuance Amount per Financing ($30M-$50M)• Despite OPIC’s $250M Maximum Loan Commitment Amount
Growing Market Float ($6 Billion Outstanding)
Secondary Market Development and Expansion
Potential Prepayment at any Time with Advance Notice
-
10-Yr UST Note (2.52%)
0.68%3.20%
Fixed Rate
OPIC Funding COPs – Recent Returns (Fixed or Floating)
The U.S. Government's Development Finance Institution 14
2-Yr
UST STRIPS
(0.62%)
0.31%0.93%
Fixed Rate
91-Day T-Bill
(0.02%)0.09%
0.11%
Floating Rate
Pricing Base + Market Spread = Investor Return
-
OPIC COPs Portfolio
The U.S. Government's Development Finance Institution 15
Fixed Rate65%
Floating Rate35%
Total Portfolio Fixed/Floating
Banks7%
Mutual Funds
9%
30%
Fixed Rate PortfolioCOP Holders
Insurance
54%
Banks6%
MutualFunds89%
Floating Rate PortfolioCOP Holders
Pension & Retirement
Funds
Pension & Retirement
Funds4%
Corporations 1%
-
OPIC COPs - State and Municipal Investors
The U.S. Government's Development Finance Institution 16
City of Seattle
State of Arizona
South Dakota Public Funds
Investment TrustState of Michigan
Retirement System
State of Connecticut
Pennsylvania Turnpike
Commission
Minnesota State Board of
Investments
State of Nebraska
City & County of San Francisco
Iowa Schools Joint Investment
Trust
City of Lakeland Police Officers’ Supplemental
Retirement Fund
Kentucky Teachers’
Retirement
State of Tennessee
Commonwealth of Virginia
-
OPIC Renewable Energy Transactions
2009 to Present
The U.S. Government's Development Finance Institution 17
Before the Green Bond Principles, OPIC’s COPs Were Already Green
Solar $998.52 Million
Geothermal $753 Million
Water Delivery $308 Million
Wind $24 Million
Hydroelectric 9.62 Million
Total $2.09 Billion
Disbursements to date of $250 Million OPIC Commitment
Solar $910 Million
Geothermal $488 Million
Water Delivery $263 Million
Wind $24 Million
Hydroelectric $5 Million Initial Draw of $250 Million OPIC
Loan Commitment
Total $1.69 Billion
Solar $910 Million
Geothermal $488 Million
Water Delivery $263 Million
Wind $24 Million
Hydroelectric $5 Million Initial Draw of $250 Million OPIC
Loan Commitment
Total $1.69 Billion
Solar $910 Million
Geothermal $488 Million
Water Delivery $263 Million
Wind $24 Million
Hydroelectric $5 Million Initial Draw of $250 Million OPIC
Loan Commitment
Total $1.69 Billion
Solar $910 Million
Geothermal $488 Million
Water Delivery $263 Million
Wind $24 Million
Hydroelectric $5 Million Initial Draw of $250 Million OPIC
Loan Commitment
Total $1.69 Billion
-
18
OPIC’s Managing Director of Capital Markets