LONG-TERM FACILITIES

Direct Long-Term Loan Program | Secondary Long-Term Program | Selection Chart

PEFCO offers two facilities for export loans guaranteed under an Ex-Im Bank long-term, comprehensive guarantee. To be eligible for these facilities, the minimum amount of the Ex-Im Bank guaranteed loan normally must be greater than $10,000,000 (excluding exposure fee and with exceptions such as for Environmental Protection loans) and/or the repayment term must be no less than ten semiannual installments.

• The Primary Long-term Loan Program (Primary Program) offers fixed interest rates which can be set in advance of disbursement, often at rates lower than Ex-Im Bank's CIRR. Users of this program can offer a "securitized" type of fixed-rate financing without the front-end cost and complexity of standard securitizations.
• The Secondary Long-term Loan Program (Secondary Program) offers both floating and fixed interest rate structures, often with slightly higher interest rates than under the Primary Program, but with greater flexibility for users in structuring loans.

PEFCO's DIRECT LONG-TERM LOAN PROGRAM

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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PEFCO's SECONDARY LONG-TERM PROGRAM

The PEFCO Secondary Long Term Loan Program also 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; however, the interest rate may not be fixed until the last disbursement has occurred. The originating party can thus offer its customers fixed and floating rates, slightly higher than under PEFCO's Direct Long Term Loan Program, without carrying low-yielding assets on its books and can convert asset-based income into fee income, while still earning a spread from the loan.

Features:

• PEFCO may be a direct lender to a borrower, may participate without recourse in a loan made by an originating party or it may purchase, without recourse, and assume the original lender's role in such a loan.
• The interest rate may remain floating throughout the life of the loan.
• Once disbursements are finalized, PEFCO will, if requested, convert a floating-rate loan to a fixed-rate loan and will assume the original lender's role.
• PEFCO's fixed and floating interest rates are slightly higher than under its Primary Program.
• An additional spread over PEFCO's fixed or floating interest rate may be added for the originating party in all transactions.
• PEFCO charges no fees other then a commitment fee.
• The originating party may charge the borrower structuring and/or letter of credit fees.
• The originating party may have the opportunity to earn other income, such underwriting fees.

Secondary Long Term Loan Program Commitment Fees

PEFCO may charge a commitment fee for PEFCO's Secondary Long Term Loan Program.

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