PEFCO's DIRECT LONG-TERM LOAN PROGRAM
Direct Long-Term Loan Program | Secondary Long-Term Program | Selection Chart

PEFCO's Direct Long Term Loan Program offers the borrower the alternatives of the security of a low fixed interest rate set prior to disbursement (often lower than CIRR), or the flexibility of using floating rates until the end of the disbursement period combined with the safety of being able to fix the interest rate at any time during that period.

Features:

• PEFCO's lowest fixed and floating interest rates for borrowers.
• PEFCO's fixed interest rate may be set in advance of disbursement or at any other point throughout the disbursement period, but it must be set no later than one year after the end of the disbursement period.
• PEFCO must be the direct lender to the borrower.
• PEFCO charges no fees other than a commitment fee.
• The originating party may charge a front-end structuring fee or letter of credit fees
• The fixed interest rate may include an additional spread for the originating party.
• The originating party may have the opportunity to earn other income, such underwriting fees.
• When PEFCO's interest rate is not fixed prior to disbursement, the originating party may make an Ex-Im Bank-guaranteed, floating-rate loan for the length of the disbursement period and PEFCO will offer to participate in such floating rate loan at a floating rate onto which the originating party may add a spread; alternatively, PEFCO can directly offer a floating-rate facility for this period, to which the originating party may add a spread.

The PEFCO Direct Loan Program provides the originating party with the ability to offer a securitized type of fixed-rate loan without the front-end complexity and cost of standard bank securitizations. The originating party can thus offer its customers competitive fixed and floating rates without having to carry low-yielding assets on its books and can convert asset-based income into fee income.

Direct Long-Term Loan Program Fixed Interest Rate

The PEFCO fixed interest rate is made up of the sum of the following six factors expressed in terms of yield:

1. The current Treasury yield curve, time-weighted for the maturity schedule of the proposed loan.
2. The PEFCO premium -i.e., the underwriters' estimate of the incremental spread over the Treasury yield curve required to sell PEFCO secured notes in the U.S. Agency market.
3. The costs of issuance of a PEFCO secured note, based on recent experience -i.e., underwriting, legal, accounting, printing, hedging and trustee fees.
4. The estimated cost of the warehousing of borrowed funds until disbursement by PEFCO. (For prompt disbursement or where disbursement has already been accomplished, this is zero.)
5. PEFCO's gross margin for administrative costs, taxes and return to shareowners.
6. A spread to be paid by PEFCO to the originating party for sourcing the loan for PEFCO

Direct Long Term Loan Program Floating Interest Rates

PEFCO’s floating interest rates are only available until one year after the end of the disbursement period. When PEFCO is participating in an originating party's floating-rate loan or making the floating-rate loan directly on aircraft loans, PEFCO's rate would be three or six month LIBOR (as is appropriate) plus PEFCO’s margin, to which the originating party may add an additional spread.

Direct Long Term Loan Program Commitment Fees

PEFCO may charge a commitment fee on the undisbursed, uncancelled amount of the loan.

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