March 18, 2013
Amy Svitak Paris
The French export-credit agency Coface has long provided export financing in support of the French spacecraft manufacturing and launcher industries. But in recent years, the U.S. Export-Import (Ex-Im) Bank has stepped up its game in the satellite telecom market as well.
An independent federal agency, the Ex-Im Bank provides government-backed loans and credit guarantees to help foreign buyers purchase U.S. goods and services. In 2001, it authorized $9.2 billion in financing to support U.S. exports, a figure that quadrupled to nearly $36 billion in 2012.
A decade ago, the handful of spacecraft projects backed with U.S. export financing were limited to sovereign transactions. Before the financial crisis of 2008, the bank supported only about one satellite deal every three or four years.
Since 2009, however, turmoil in the banking industry and fluctuating currency rates prompted satellite operators to favor export-credit institutions over commercial lenders for financing new projects. In response, over the past three years, the Ex-Im Bank has authorized more than $3.5 billion in satellite financing for U.S. manufacturers, including $517 million in the first quarter of fiscal 2013 alone.
“U.S.-manufactured satellites and satellite-related equipment are highly competitive internationally,” says Marcia Wiss, a partner at Washington-based international law firm Hogan Lovells U.S. who advises export-credit agencies. “As more and more U.S. satellite manufacturers turned to the U.S. Ex-Im Bank for financing their exports, the agency decided it was worthwhile to set up a group within the structured finance department with specialized industry knowledge.”
Even established operators not struggling for cash are availing themselves of this now common source of low-cost financing, notably mobile satellite services (MSS) provider Inmarsat of London and Luxembourg-based SES, the world's second-largest fleet operator by revenue.