proviso that the joint and several Guarantee of the shareholders (including the Government of Macau) is in a form giving no lesser security than an unfettered sovereign guarantee.
3
The security at 2b is not acceptable. CAM is a corporate body set up solely for the airport and we are unwilling to underwrite on the viability of the project. To support the business on 84 years credit, taking risk to 2003, we have stipulated the need for satisfactory security from outside Macau eg a first class
bank guarantee.
4 SP claims that the French competitor has offered finance on the strength of the security at 2a to 1999 supplemented by the guarantee of the Bank of China for later maturities. The French ECA tells us they have not yet made an offer of support but that they are unlikely to decline this security. We also regard the Bank of China as strong enough for the top up amount involved (£17m),
5
The Bank of China would be the natural entity to provide security to the extent that they are involved in the project as lenders and as advisors to CAM. Whilst ECGD considers the Bank of China to be acceptable for the amount in question the Foreign and Commonwealth Office have expressed reservations about our going down this route. They will wish to comment further but we understand the gist of their concern is that the requirement of, or rather the acceptance of, a Bank of China guarantee for the post 1999 maturities could be interpreted by the Chinese as a lack of faith by HMG in the Sino-Portuguese Joint Declaration which closely follows the Sino-British Joint Declaration on Hong Kong. From the ECGD perspective there are major differences between the Macau and Hong Kong situation. Firstly the strength of the Macau economy does not compare with that of Hong Kong and secondly the security so far offered for the post 1999 maturities fall far short of that
that being offered in the period up to the end of 1999 and as such is inadequate Alen A Bank of China guarantee for Macau obligations would not be tantamount to а Chinese Sovereign guarantee.
6 If we agree to accept a Bank of China guarantee for later maturities this will involve a commitment of £17m requiring Treasury approval as cumulative commitments on China within the Amber Zone Budget for 1992-93 now exceed £200m.