The US Export-Import Bank (Ex-Im) expects to keep pace this year with its $11.6 billion of financing authorisations for fiscal year 2012, even in the wake of costlier export credit under the Aircraft Sector Understanding (ASU).
"We keep hoping the level of activity will go down but we anticipate about the same dollar amount as last year, although this will represent a smaller percentage of total aircraft deliveries," says Bob Morin, vice president, transportation at Ex-Im Bank.
In first quarter of fiscal year 2013 ended 31 December, Ex-Im, authorised $2.3 billion in aircraft financing guarantees, covering 23 aircraft, a sharp increase from the $693 million of transactions in the final quarter of fiscal year 2012.
Though airlines and lessors are expected to opt for alternative sources of financing due to the ASU, Morin believes there "might not be as quick a shift [to other financing sources] to the degree many people think."
He notes "Boeing's production rates are going up not down," so there is a need for even more financing generally, and from many more sources of financing.
"Here at Ex-Im, we need to figure out what are the other sources of financing going to be. What role will the EETC, sale and leaseback and commercial markets play? It is hard to predict where all the financing will come from just now."
Ex-Im has approximately 1,050 aircraft in its portfolio with no defaults currently. Morin expects some "repeat transactions" this year from existing customers.
"Demand for Ex-Im support is countercyclical with what the commercial markets are willing to do. If the commercial banks choose to finance single-aisle aircraft such as the 737s, Ex-Im is willing to complement what the commercial banks do by financing widebody aircraft, such as the Boeing 767, 777, 787 or 747 aircraft," he says.
In addition, due to how Ex-Im structures its aircraft financings, the bank isn't "afraid of end-of-production cycle or beginning-of-production cycle aircraft that the commercial market tends to say 'no' to."