JBIC Signs MOU with North-West Telecom regarding Buyer's Credit Support for Japanese Exports based on the Credit of Russian Private Firm
NR/2005-54
November 22, 2005
November 22, 2005
- Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed a Memorandum of Understanding (MOU) today regarding a potential buyer's credit*1 with North-West Telecom (NWT) based in St. Petersburg, Russian Federation.
- This MOU aims at expediting procedures and consultation meetings necessary to materialize the buyer's credit, such as examination of NWT's credit standing and discussions on loan conditions. The signing of this MOU is expected to boost exports to NWT by Japanese firms.
- Amidst the background of the robust economic growth in recent years, the diffusion rate of telecommunications lines and the volume of communication have been steadily increasing in Russia, leading to strong growth in the telecommunications market. In an effort to meet the increasing communication demand, NWT and other domestic telecom operators have been making active investments in capacity expansion and the upgrading of equipment. As a result, Russia has become not only a promising export destination for Japanese exporters, but also a promising destination for expanding business activities over the medium and long-term for Japanese manufacturers, as indicated by the results of "Japanese Manufacturers' Overseas Business Operations 2005," an annual survey conducted by JBIC. In this survey, Japanese manufacturing companies indicated growing interest in Russia and voted the country the 6th most promising destination for expanding business activities. In light of these circumstances and with an eye to the planned capital investment by NWT in particular, JBIC has decided to sign this MOU which aims to increase the chances of Japanese firms, thereby promoting their exports to Russia.
- As a part of the efforts to promote trade and investment based on the Japan-Russia Action Plan, to this day JBIC has been supporting Japanese exports to Russia through the provision of bank-to-bank loans to Russian banks. Upon successful implementation of the direct (corporate risk-taking) loan to NWT through the framework of this MOU, NWT will become the second Russian corporation to receive JBIC's corporate risk-taking buyer's credit, following ROSTELECOM.*2 JBIC intends to take corporate risks in financing Russian corporations to support the exports of Japanese firms to Russia, while closely watching the credit standing of Russian corporations.
- *1 Buyer's credit is a financial instrument extended directly to an importer in the receiving country to finance the purchase of machinery and equipment from Japan.
- *2 Buyer's credits for ROSTELECOM (cofinanced with the private sector bank)
- L/A signed: March 2004; loan amount: up to US$2.66 million
- L/A signed : July 2005; loan amount: up to US$7.85 million
