The Export-Import (Ex-Im) Bank of the United States spent $250m in financing around 25 business-jet and helicopter purchases last year. However, this figure constitutes a mere 2% of all aircraft financed by the Ex-Im Bank in 2011, when it allocated a hefty $11.5 billion towards 160 commercial aviation deals.
"The statistics make me cringe a bit," admitted Bob Morin, vice president, transportation, Ex-Im Bank, speaking at the International Corporate Jet & Helicopter Finance 2012 conference in London earlier this week. "An airline that doesn't know about Ex-Im is simply not paying attention, but it's hard for business jet customers to know about Ex-Im when some of the manufacturers don't even know what it is," he said in defence of the gaping chasm between commercial-aircraft and business-jet Ex-Im funding.
Yet Morin predicts a shift in the export credit bank's asset allocation in favour of the business jet market over the coming years. The changing terms being imposed on export credit agencies mean that the Ex-Im bank will have a smaller role to play in commercial aircraft management, he said.
"Over the next five years, export credit agencies will be doing fewer commercial aircraft deals and the business jet industry will reap the benefits," he noted, adding that "the golden age of ECA financing in business jets lies ahead of us."
The Ex-Im Bank has a team of 10 to manage its portfolio of existing loans and guarantees, worth around $45bn. Fewer export credit agency (ECA)-backed commercial aircraft deals on the cards for the years to come should mean more manpower behind investments in the business jet market.
Meanwhile, a hike in pricing has seen many banks retreat from funding export credit-guaranteed loans in commercial aviation. "The European banks that had been very strong in funding Ex-Im Bank-backed deals are turning their hand to arranging deals, rather than funding them, [which is] bringing other players to the table," said Morin, who alluded to the capital markets as a new way of funding Ex-Im backed deals.
Although business jet deals are too low in value to appeal to the capital markets, it appears there will be no shortage of Ex-Im Bank funding available for the asset class. "We are not yet where we want to be in the market and we have a much bigger role to play in terms of supporting Cessna, Hawker and Learjet aircraft," Morin said.
The US government recognises the important role the Ex-Im Bank has to play, said Morin, highlighting US President Barack Obama's announcement 18 months ago that he intended to double the country's exports over five years.
However, he remained tight-lipped on the proposed merger of Ex-Im Bank with five other government agencies, comprising the Commerce Department, the Office of US Trade Representative, the Overseas Private Investment Corporation, the Small Business Administration and the US Trade and Development Agency, merely remarking that he could "see there are efficiencies in combining several related agencies".
Source: Flight International