As Ex-Im Battle Brews, Novel Satellite Export Deals Stir Pot

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PARIS — The U.S. Congress is gearing up for yet another debate over whether to renew the authorization of the U.S. Export-Import Bank at a time when other nations appear to be retooling their export-credit agencies to help their industry.

China regularly uses government-backed loans to stimulate exports of telecommunications satellites, usually bundled with a launch on China’s Long March rocket. The Russian government has stated its intention to do likewise, but as yet has not been a force on the market.

The British government has said it too is looking to reposition itself as a satellite exporter and would look to government-backed loans as a means to promote its industry.

France’s Coface, a regular partner to the U.S. Ex-Im — the most common pairing is a U.S.-built telecommunications satellite launched aboard a European Ariane 5 rocket — remains committed to the sector despite its involvement in several projects whose financial status is clouded.

Coface is backing the sale of a satellite telecommunications payload built by Thales Alenia Space of France and Italy to Russia’s Gazprom Space Systems in a deal that has been made more challenging by the fall of the Russian ruble against the euro.

Ex-Im and Coface are both struggling with their more than $300 million backing of NewSat of Australia, for a Lockheed Martin-built telecommunications satellite to launch on an Ariane 5. NewSat is negotiating with Ex-Im and Coface on revised loan terms and has advised investors that a favorable outcome is not certain.

Industry officials say the NewSat financing, which had been a challenge from the start for Ex-Im and Coface, will test both export-credit agencies’ ability either to nurse a struggling company back to health, or to repurpose and resell an asset — in this case, a half-built telecommunications satellite and a launch reservation.

In the latest example of an export-credit agency’s regulatory dexterity, Export Development Canada (EDC) has agreed to finance a loan of about 140 million euros ($170.2 million) to satellite fleet operator Hispasat of Spain.

Hispasat is purchasing its Amazonas 5 telecommunications satellite from Space Systems/Loral (SSL) of Palo Alto, California, one of the world’s top commercial telecommunications satellite exporters.

SSL is owned by MDA Corp. of Canada. This link is apparently sufficient for EDC to approve the financing. A similar loan was approved for an earlier SSL-built Hispasat satellite in mid-2014.

“When MDA earns new business, it helps to grow their supply chain of Canadian small- and [medium-size] companies,” Carl Burlock, EDC’s senior vice president for financing and investments, said in a March 26 statement about the loan. “This is a great opportunity for any Canadian company in the satellite industry, and EDC is here to help all of them. EDC’s financial solutions can be an important asset to companies like Hispasat and MDA with unique business needs.”

The current low-interest-rate environment presumably makes export-credit financing less important, but Gwynne Shotwell, president of Hawthorne, California-based launch service provider SpaceX, told a Washington audience in mid-March that Ex-Im help was important to SpaceX several years ago, when commercial bank financing was less available.

Ex-Im’s current charter expires June 30 if it is not renewed by Congress.