* First use of US credits for wheat this year
* Egypt is world's largest wheat importer
WASHINGTON Feb 28 (Reuters) - Egypt recently used U.S. export credits to pay for a U.S. wheat purchase, its first use of the guarantees for the food grain this year, the U.S. Agriculture Department said on Thursday.
The credits were tapped as concerns were rising among bankers about the ability of Egypt, the world's largest wheat importer, to meet its needs through its traditional methods of public tenders and letters of credit.
Created to facilitate U.S. farm exports, USDA's export credit guarantee program, known as GSM-102, assures lenders they will get paid even if a borrower defaults. The short-term credits cover up to 98 percent of the principal and a portion of the interest.
USDA said $17.7 million worth of wheat was sold to Egypt in the past couple of weeks through the export credit program. A spokeswoman was unable to provide the specific date.
The amount of credits used correlates closely with a 60,000-tonne cargo of U.S. soft red winter wheat reported on Feb. 20. The cargo, for April shipment, was sold by Venus at $296.75 per tonne.
However, the same company on Feb. 2 sold another 60,000 tonnes of SRW wheat to Egypt for March shipment at $306.80 per tonne.
Credits were also issued for $20 million of soybean oil and $9.8 million of soybeans earlier in the fiscal year, which started Oct. 1.
The wheat purchased under the credit program represents a fraction of the 1.1 million tonnes sold to Egypt during the marketing year that ends on May 31.
During the previous fiscal year, USDA credits were used for $98.3 million of soybeans and $13.1 million of wheat to Egypt. USDA typically reports the destination of exports but not the name of the buyer.