Institution details

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ECO Trade and Development Bank (ECO)

Key facts

  • Established in 2005
  • Ownership: Public

Latest update: 03/12/2021

Products

  • Loans
  • Guarantees
  • Equity
  • Other products

Loans

  • Project finance loan:
    - Can be sovereign or non-sovereign
    - In assessing the viability of the projects, ETDB establishes a reference minimum rate of return of 10%
    - Maturity period: Typically, no more than 10 years, though a longer period can be considered in exceptional circumstances
    - Grace period: Up to one-third of the length of the loan maturity
    - Funds availability period: Up to 5 years
  • Corporate finance loan
  • SME credit line:
    - Sub-loans are provided on a commercial basis through client financial institutions incorporated in the respective member country
    - Sub-loans are usually available with maximum maturities of 3–5 years and grace periods of up to 12 months (up to 24 months in exceptional cases)
  • Soft loan financing: Public sector loans extended only to the government of a member state
    - Tenor: Maximum of 10 years
    - Grace period: Maximum of 3 years
    - Interest rate: Same as that approved by the board of directors for sovereign guaranteed loans (to be revised biannually)
    - Fee and other charges: No more than 0.2% of the total amount"
  • Currencies: Any currency, including local currencies, or a combination of currencies in which ETDB is able to fund itself
  • Repayment and tenors: Most loans will be medium- to long-term; maturity of the loans normally will not exceed 10 years
  • Fees:
    - Front-end commission fee: 0.5%–1%, payable in a single instalment between the time of signing and the first disbursement
    - Commitment fee: 0.25%–1.5% for both variable-rate loans and fixed-rate loans
    - Prepayment fee: Included in loan agreement
    - Conversion fee: Conversion from one loan configuration to another may be subject to a fee

Guarantees

  • Bid bond: Covers 1%–5% of the contract value
  • Performance bond: Typically covers 5%–10% of the contract value, but may cover up to 30% in complex projects
  • Advance payment bond: Covers entire amount of the advance payment (typically 5%–20% of the project cost)
  • Loan guarantee/project risk guarantee
  • Country risk guarantee: Covers up to 90% (100% in certain cases) of specific risks
  • Stand-by letter of credit
  • Fees and charges:
    - Exposure fee (risk premium): Either a flat-charge fee (up to 8%) or a periodic fee (0.25%–6% per annum), payable every quarter
    - Commitment fee

Equity

  • ETDB generally prefers to use the below instruments for equity investments:
    - Common stock
    - Preferred stock
    - Mandatory convertibles
    - Common stock equivalent
    -Exposure limit: 5%–25% (may be exceeded in the case of establishing a subsidiary)
    - Total committed equity investment to any single obligor may not exceed 5% of paid-in capital
  • Although the rates for individual countries vary, ETDB generally looks for a real return on stand-alone equity investment of about 20%

Other Products

  • Export finance facility: Provides financing for transactions up to 100% of the invoice amount if exported goods and services are produced in ECO member countries
  • Import finance facility:
    - If imported goods originate from other ECO region countries, up to 100% of the invoice amount can be financed
    - If imported goods do not originate from other ECO region countries, up to 85% of the invoice amount can be financed

Performance highlights

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