CCC announces coverage on additional payment options for letters of credit under the GSM-102 program
WASHINGTON – The U.S. Department of Agriculture announced today it will provide coverage for exports under sight letters of credit (LC) without refinancing under the Commodity Credit Corporation’s Export Credit Guarantee Program (GSM-102). Typically, GSM-102 payment guarantees cover credit terms of up to 18 months, with repayment terms negotiated between the importer’s and exporter’s financial institutions. With a sight LC without refinancing, payment occurs immediately or “at sight” once the commodity is exported and the U.S. and foreign financial institutions review and approve all applicable documents. Such guarantees will be available for applications submitted in accordance with 7 C.F.R. 1493.70; exporters may request sight LC coverage when applying for a payment guarantee by selecting this option as the term length of credit being extended in accordance with 7 C.F.R. 1493.70(a)(17). CCC’s obligations will be the same as stated in 7 C.F.R. 1493.180. Guarantee fees for a sight letter of credit are available on the FAS website at https://www.fas.usda.gov/programs/export-credit-gurantee-program-gsm-102/gsm-fee-schedule.
Under payment guarantees covering sight LCs without refinancing, exporters’ contractual arrangements must call for exports no later than 60 days from the date of registration or Nov. 30 of the following fiscal year, whichever date is earlier. The final date to export on the payment guarantee will be as stated in 7 C.F.R. 1493.100(d). Under a sight LC without refinancing provisions there is typically no stipulated payment due date. To establish a final date for payment to the holder of the payment guarantee, that if not met by the foreign financial institution on a complying submission of documents would place the foreign financial institution in default, the guarantee will stipulate a “validity period” for each export under the payment guarantee. The validity period will be no later than 45 calendar days after the date of export. In the event of non-payment by the foreign financial institution within the validity period under the letter of credit, a notice of default must be submitted as stated in 7 C.F.R. 1493.160 and a claim for default filed in accordance with 7 C.F.R. 1493.170. Coverage on an export will expire if the Notice of Default is not received as so stipulated.
By announcing this coverage, CCC is responding to requests by U.S. stakeholders to increase flexibility in the GSM-102 program to support U.S. agricultural exports.
For further information, contact the Operations and Analysis Branch of the Foreign Agricultural Service at (202) 720-3277, or by email at firstname.lastname@example.org.
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