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Boeing Capital makes up for lack of US Ex-Im guarantees

Boeing Capital’s financing and investment portfolio more than doubled year-on-year ending with a total value of $4.1 billion in 2016.

The financing arm of the US manufacturer provided customer financing of $1.4 billion last year after providing $586 million the previous year, almost a 135% increase.

Boeing Capital’s financing portfolio covers a number of customers that the company believes have less than investment-grade credit, according to the company’s annual report released this week.

“While we may be required to fund a number of new aircraft deliveries in 2017 and/or provide refinancing for existing bridge debt, we expect alternative financing will be available at reasonable prices from broad and globally diverse sources,” Boeing says.

Boeing Capital noted that the volume of new business could increase again this year if the Export-Import Bank of the USA continues to be unable to approve new transactions.

“Until the U.S. Senate confirms members sufficient to reconstitute a quorum of the bank’s board of directors, the bank will not be able to approve any transaction totaling more than $10 million. As a result, we may fund additional commitments and/or enter into new financing arrangements with customers,” Boeing says.

Boeing says that non-US customers may choose to delay purchases if they cannot obtain financing at reasonable costs. Additionally, the company warns that the lack of US Ex-Im support for Boeing aircraft could impact future sales campaigns involving non-US customers.

“We continue to work with our customers to mitigate risks associated with the lack of a quorum of the bank’s board of directors and assist with alternative third party financing sources.”

FlightGlobal first reported in June that Boeing was considering commercial alternatives for the US Ex-Im Bank guaranteed loans.

It is understood that the manufacturer is nearing a deal after working with Citi, Goldman Sachs and Morgan Stanley to create a new programme where insurers would guarantee the loan for weaker credit airlines purchasing aircraft.

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