US DFC approves $500 million in guarantees to boost US exports to emerging markets

By Andrea Shalal

WASHINGTON, Sept 16 (Reuters) - The U.S. International Development Finance Corp on Wednesday approved a $500 million trade financing facility that will help U.S. companies access emerging markets in ‌South America, Southeast Asia and Africa, the agency's chief executive, Ben Black, said.

The facility, ‌approved by the DFC's board, will offer counter-guarantees in partnership with the World Bank's International Finance Corp, its private-sector arm, and ​its Global Trade Finance Program, Black told Reuters.

"The goal is trying to expand the program and further grow U.S. exports," he said in an interview.

Under Black's leadership, DFC has expanded its investment cap to $205 billion and shifted its focus from traditional poverty alleviation toward mining, extractive industries, energy and digital infrastructure, ‌with an eye to countering ⁠China's global influence and securing vital supply chains for the U.S.

Black said the trade facility could unlock up to $20 billion in U.S. exports to new and challenging markets, ⁠where competitors often dominate, and support up to 10,000 U.S. jobs.

The program is expected to support several industries, including agriculture, such as natural fibers, grains, soy and diversified edible crops; primary metals such as iron ​and ​steel; industrial and consumer products such as computers and ​electrical products, light vehicles and industrial machinery.

The ‌goal is to build new relationships and strengthen existing ties among local companies, foreign issuing banks, U.S. exporters, and U.S. confirming banks, setting up a "self-reinforcing cycle" that would generate further opportunities for U.S. exports in years to come, DFC said.

Black said the guarantees would support small banks and financial institutions in Central and South America, Southeast Asia and Africa, which needed lending support to finance the ‌purchases of U.S. goods. DFC said it would start with ​an initial list of banks in certain countries that have ​been historically active in importing U.S. goods, but ​gave no details.

Some of the biggest benefits should be felt in Iowa, ‌Ohio, Colorado, Kansas, Pennsylvania and Michigan, Black said.

DFC ​said the facility would ​be especially helpful for small U.S. businesses that were entering riskier new markets and could not afford the risk of a default on importer payments.

Black said that the IFC's Global ​Trade Finance Program had funded $141 billion ‌in trade over 20 years with zero losses. DFC will also earn fees on ​the loan guarantees that could generate tens of millions of dollars over 10 years.

(Reporting by ​Andrea Shalal in Washington; Editing by Matthew Lewis)