PEFCO: benefits of U.S. exports to Mexico

A significant portion of U.S. exports to Mexico have benefited from the Private Export Finance Corporation (PEFCO).

PEFCO complements export financing from commercial banks and other lenders.

At the same time, EXIM guarantees the interest on PEFCO’s secured notes under a long-term guarantee and credit agreement.

All PEFCO-financed loans are guaranteed by EXIM or, in some cases, by other U.S. government institutions, such as DFC.

Under its long-term lending programs, PEFCO acts as a direct lender and secondary market purchaser of export loans made by other lenders.

Its medium-term instruments (secured promissory note, discount or secured lease) are only available to other lenders, and only for the portion of the loans covered by EXIM (or other U.S. government institution) guarantees.

PEFCO

At the end of fiscal 2021, the total value of PEFCO’s loan portfolio was $3.29 billion, with aerospace export loans accounting for approximately three-quarters of that amount, according to World Trade Organization (WTO) data.

By country, the largest exposures were to China ($680 million), Mexico ($653 million) and Kenya ($490 million).

The EXIM’s inability to approve major long-term transactions between 2015 and 2019 weighed on PEFCO’s results, which recorded annual net operating losses ranging from $8 million to $21 million in fiscal years 2019, 2020 and 2021.

Machinery and equipment remained the leading category of products exported from the United States over the past four years, followed by mineral products and chemicals.

During this period, there was a slight increase in exports of chemicals and pharmaceuticals.

This growth was driven by both continued responses to the pandemic and increased demand from economies around the world that were recovering from pandemic-related shutdowns.