Case Study

Federal Credit Reform Support Services at the Overseas Private Investment Corporation (now the U.S. International Development Finance Corporation)

Challenge: The Overseas Private Investment Corporation (OPIC)*, the U.S. Government’s development finance institution, oversees a number of federal loan programs. Consequently, OPIC requires comprehensive federal credit reform support services, including the development of a new re-estimate cash flow model, enhancement of its preexisting loan obligation cash flow model, and advice concerning the scoring of loan modifications. OPIC also requires long-run technical advice as it aims to transition from cohort level re-estimates to loan level re-estimates.

Solution: Summit is currently engaged to provide a suite of federal credit services for OPIC’s portfolio of more than 400 direct loans and loan guarantees. This multi-year engagement centers around the design, implementation, operation, and maintenance of new credit subsidy cash flow models that will be used to provide obligation analyses as well as annual budget formulation and budget re-estimate calculations. OPIC currently administers a large and diverse loan portfolio, including more than $3 billion in direct loan obligations and approximately $8 billion in loan guarantees. Because of the heterogeneous composition of OPIC’s loan portfolio, each loan requires a distinct credit reform calculation based on OPIC’s credit subsidy cash flow models. These complex, loan-level models will enable OPIC to monitor the projected credit cost of each loan guarantee throughout the life of the loan instrument. Summit leads the annual re-estimate of subsidy calculations. These estimations require extensive formatting and consolidation of historical and actual Oracle-sourced financial performance data. Summit works closely with OPIC budget and accounting staff to validate the subsidy model inputs, ensuring that all inputs accurately reflect actual loan performance. For the Office of Management and Budget (OMB) and internal documentation, Summit also prepares re-estimate memos summarizing the results of Financing Account Interest Calculations, technical re-estimates, and interest rate re-estimates. In addition to cash flow modeling and budgetary support, Summit is also called on to advise OPIC budget staff on frequent ad-hoc analyses. These include modification scoring, following OMB Circular A-11 guidance, as well as cost-benefit analyses and workout recovery scenario evaluations.

*OPIC is now the U.S. International Development Finance Corporation (DFC)