J., HENRY SCHRODER WAGG & CO. LIMITED
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Other export credit authorities
3.
The country supplying the nuclear island will be expected to provide a supporting export credit package. It is understood the supplier could be from France, Germany or the USA. It is likely that the best credit terms would be provided by France and the worse from Germany. As soon. a decision is made on the NSSS supplier, discussions on export credit terms should take place. France would be more likely to provide credit in US dollars and longer repayment terms. They might also offer a credit mixte which would reduce the overall interest rate. In the meanwhile it would be helpful to find out the credit terms which were offered by Framatome to PRC in their previous nuclear power station discussions.
Commercial loan terms
At present there has been little commercial borrowing by PRC. Loans concluded have tended to be bullet loans for 5 to 6 years at a margin % over LIBOR. Personally, I think it would be inadvisable to plan on commercial loans beyond 10/12 years (from draw down) at a margin of % over
LIBOR.
Capitalisation of interest
As the proposed joint venture power station will not be earning revenue until after the sets have been commissioned it has been proposed that no interest or dividends will be paid until after commissioning. It is therefore a requirement that the lenders will roll up interest due which will be paid over the loan repayment period. This facility is one provided by ECGD in special circumstances. It has also been accepted by other export credit authorities particularly the Japanese and the French. The commercial lenders will probably also agree to this if it cannot be avoided.
Equity
I will deal with the various issues concerned with the provision · of equity including the amount, investing vehicle and posssible investors in a further paper to be prepared in two weeks' time.