CONFIDENTIAL
1P
密
7
XCC(75)55
(b) Finance
D
15
The finance for the project will be made up of export credits granted by the countries of origin of the contractors, and open market finance, which will include loans in various forms raised locally in Hong Kong and overseas. The following paragraphs are supported by a more detailed statement of the proposed financial strategy for the Corporation at Annex D.
Export Credits
16
In paragraph 27 of memorandum XCS(75)1 it was assumed that 40% of the final total contract cost of $4, 900 million would be financed by means of export credits, over a seven year period from about 1979, at an average rate of interest of 8% per annum. In the intervening period since then, twelve countries in North America and Europe, as well as Japan, have been visited. Firm indications setting out the export credit terms that were likely to apply to contracts placed by the Corporation have been obtained from those countries likely to be seriously engaged in tendering. While these indications are not legally binding, they are accepted in both Government and banking circles as a method of obtaining a firm indication, without paying a commitment fee, The terms are capable of being marginally improved in final negotiation before placing contracts.
17
In the case of those countries seriously engaged in tendering, it should prove possible to negotiate an average of 40-50% cover (say, $2,000 million) over a ten year period from individual contract com- pletion, at an average rate of interest of 81% per annum. The conditions vary from country to country but, overall, and particularly in respect of the length of the repayment period, the availability of finance from this relatively cheap source is of considerable importance and reflects an excess of capacity world-wide in the engineering industry.
Open Market Finance
1
18
The January view of the availability of open market finance envisaged funds being borrowed under Government guarantee from the following markets:
Average Annual
Assumed Interest
Market
Availability
Rate
Final Redemption
Year
(HK$ million)
(%)
Local
107
9
6
Euro-
120
9
11
US Domestic
150
9
15
Middle East
375
7
7
International Bankers
Balance
9
5
Jele
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