PARIS — The U.S. Export-Import Bank, as expected, closed its doors to new business July 1 following the U.S. Congress’s inability to renew bank authorization, but said all existing loans and guarantees will be maintained and carried to their maturity.
The same U.S. industry officials who had hoped Congress would approve an 11th-hour reauthorization said Ex-Im is likely to be shuttered only for a few months, the time needed for congressional backers to regroup.
Congressional opponents to Ex-Im have marshaled several arguments on their behalf, but the common thread – backed by some U.S. airlines — is that the bank is an unnecessary government hand on the scales of the free market.
In a statement on its website resembling a front-door home-foreclosure notice and titled “AUTHORITY HAS LAPSED,” Ex-Im said:
“All preexisting loans, guarantees and insurance policies will continue in full force and effect. We will process and close all previously approved transactions, which will also continue in full force and effect according to their terms. The Bank will continue to manage all transactions in its portfolio until maturity, including issuing waivers and amendments (other than those which increase the Bank’s exposure).
“We are fully appropriated through FY2015 (the U.S. government fiscal year ends Sept. 30) and will be able to continue operating after July 1, 2015.”
The immediate effect of Ex-Im’s closing on U.S. satellite builders and on SpaceX — the only U.S. launch-service provider active in the international market — is difficult to judge and depends on how many non-U.S. satellite operators under tight deadlines will need export-credit agency backing well before the end of this year.
Export Development Canada, for example, has shown its ability to provide support for projects managed by Canada’s MDA Corp. even when most of the satellite construction is done at MDA-owned Space Systems/Loral of Palo Alto, California.
MDA has successfully argued that a sufficient portion of the work on the SSL satellites will be sourced in Canada to justify export-credit aid.
The other major U.S. satellite builders – Boeing Space and Intelligence Systems of El Segundo, California; Lockheed Martin Space Systems of Sunnyvale, California; and Orbital ATK of Dulles, Virginia – all have U.S. corporate parents, making it less likely for them to find export-credit assistance outside Ex-Im.
The same is true for Hawthorne, California-based SpaceX, which in seeking U.S. government contracts has made a point of pride out of the fact that its Falcon rockets are almost entirely built in-house. The amount of a Falcon’s value originating outside the United States — a Dutch company provides aluminum — is no more than 1 percent, SpaceX has said.
Since 2010, when Ex-Im started a major push on behalf of U.S. satellite and launch exports, the bank has issued loans and other support averaging $1 billion per year, surpassing France’s Coface. Between 2010 and 2014, satellite exports, for satellite construction or launch, was Ex-Im’s fastest-growing sector, even ahead of Boeing aircraft in terms of the rate of growth, Ex-Im President Fred Hochberg said.
Part of the increased support was due to the arrival of SpaceX as a credible player in the global commercial launch market, and part was due to the successes of SSL, Boeing, Orbital ATK and Lockheed Martin in winning export customers.
One company whose financing might be affected is OneWeb LLC of Britain’s Channel Islands, which has recently secured $500 million in equity for a large low-orbiting constellation of Internet delivery satellites expected to cost between $2.5 billion and $3 billion.
OneWeb officials have said they will be seeking a conventional debt/equity financing structure with $1 billion in equity and the rest in debt – with export-credit agency backing a prime candidate for the debt piece.
OneWeb has also said that while Airbus Defence and Space of Europe will be lead prime contractor of OneWeb’s initial 900-satellite production run, only the first 10 pilot satellites will be built in Europe – a Airbus’s Toulouse, France, facility.
The remaining satellites will be built at a U.S. facility that Airbus and OneWeb will co-own, at a location that to be selected in the coming weeks.
OneWeb founder Greg Wyler has shrugged off the Ex-Im situation, saying he is unconcerned with assembling a debt package. But how much Coface will be willing to back what is essentially a U.S. production run — even one with a European prime contractor and some European components — remains to be seen.
OneWeb plans to launch its constellation between late 2017 and late 2019 and will need to assemble a debt package this year.
