China Eximbank provides seller's credit to Yutong Bus Corporation to enable Cuban Government acquisition of 1,998 buses (Linked to Record ID#54763)

Project narrative

Between 2007 and 2009, Yutong Bus Corporation ('Yutong') and the Government of Cuba signed four commercial contracts worth $184 million to facilitate the acquisition of 1,998 buses. To support these transactions, China Eximbank provided an export seller's credit (loan) to Yutong Bus Corporation ('Yutong'), which in turn used the proceeds of the loan to provide a supplier's credit to the Government of Cuba for the purchase of 1,998 energy-efficient Yutong buses. The supplier's credit carried a 5-year maturity and it was supported by a Sinosure credit insurance policy worth approximately 90% of the cost of the four commercial contracts ($161 million). All other borrowing terms are unknown. By July 2011, the Government of Cuba had made repayments to Yutong worth $76.63 million and its outstanding debt to Yutong was worth $102.68 million. Yutong shipped the bus parts from its Zhengzhou factory for assembly in Havana, which reduced shipping costs by 15% and promoted skills transfer through the training of Cuban personnel (as captured via Record ID#54763). As of March 6, 2014, the Government of Cuba was using 500 buses for public transport supplied by Yutong. The Government of Cuba reportedly defaulted on its repayment obligations under the supplier’s credit agreement (with total repayment arrears eventually exceeding $100 million); however, since the export seller’s credit was insured by Sinosure, the seller (Yutong) was compensated via indemnity payments. In April 2010, the Government of Cuba requested that its outstanding debt (under the supplier's credit) be restructured. Yutong then filed an insurance claim with Sinosure in July 2010. Sinosure made an initial indemnity payment (worth $14.27 million) to Yutong in March 2011 and another indemnity payment (worth $34.39 million) to Yutong in July 2011. One or more additional indemnity payments were subsequently made, cumulatively resulting in indemnity payments from Sinosure to Yutong worth at least $99 million.