Overseas Private Investment Corp. Offers Safe Play in Emerging Markets
Hills, Howard, American Banker
For institutional lenders active in cross-border transactions, there has never been more opportunity for lending to viable business projects in emerging markets, or more risk that instability in the form of war, civil strife, expropriation, and inconvertibility of currency present in those foreign markets will derail those loans.
There is a way to mitigate the risk and enhance the opportunity in emerging-market investment through the Overseas Private Investment Corp., one of the best-kept secrets in the banking community.
OPIC is an innovative federal business development program providing strategic risk management and financing support for U.S. businesses competing in international markets. The agency has a 20-year record of producing in developing countries the type of sound private investment that banks find attractive.
Political Risk Insurance
OPIC operates in over 130 countries and participates, through political risk insurance and project financing, in ventures with private investment of over $7 billion annually.
OPIC projects have generated over $24 billion in U.S. exports, and its annual export performance now exceeds $3 billion.
In 20 years OPIC has paid over $450 million to U.S. businesses on claims for covered losses, but sound financial management and aggressive failed project asset recovery have kept losses low.
The secret to OPIC's success is that instead of giving grants to governments, OPIC becomes a partner in risk management with U.S. investors putting capital at risk in ventures producing jobs and profits in the U.S. and host country.
OPIC insures U.S. investors for up to 20 years against overseas losses due to host country political risk. …