ECAWatch Newsletter 9

Government of Spain selling off 50% of CESCE

(Ministry of Finance, Madrid, 14 September 2012)  The Government of Spain has authorized the sale of 50.25% of CESCE, the Spanish official export credit agency, with a potential value of €200 million.

Ex-Im Bank Spurs ECA Backed Bond Rush to Finance Boeing Planes

  (Bloomberg, New York, 11 September 2012) Airlines from Europe to Asia to South America, boosted by help from the U.S. government, are turning to the bond market and away from loans to finance Boeing jets as borrowing costs plunge. Emirates, based in Dubai, and Ireland’s Ryanair Holdings are leading carriers that have issued $2.3 billion of bonds in 2012 backed by the U.S. Export-Import Bank, a jump of more than sixfold from a year earlier, according to data compiled by Bloomberg. Interest rates at record lows and a new debt-guarantee program from the Ex-Im Bank are making it easier for non-U.S. airlines to access capital markets even as private-sector lending becomes more expensive and difficult to obtain. Boeing, the biggest U.S. exporter, stands to benefit while working through a jet backlog valued at $302 billion. 

Crédit Agricole launches ECA backed bonds

  (4-Traders, Annecy, 20 September 2012) Crédit Agricole has launched an inaugural issue of bonds by a new subsidiary dedicated to public-sector refinancing. The issue of bonds is backed by a portfolio of export credits guaranteed by COFACE, Euler Hermes or ECGD export credit agencies on behalf of their respective governments. 

Beijing to increase export credit insurance to small companies

  (Hong Kong Standard, Hong Kong, 13 September 2012) Beijing said yesterday it will pay back export tax rebates faster and grant more loans to exporters, as well as increase export credit insurance to small companies, in the latest move to prop up the country’s economy. 

Diversion of Tigris river completed, construction of controversial Ilisu dam to begin

  (Nature Iraq, Sulaymaniyah,30 September 2012) A new construction phase was “celebrated” at the Ilisu dam site with a big ceremony last week: The Tigris river has been diverted at the construction site now flowing through three big tunnels. This diversion will be maintained for several years and construction of the actual dam in the dry river bed begins. The Turkish Minister of the Environment Veysel Eroglu called the Ilisu dam, to be completed in 2014, an “important strategic and economic project”.  It remains unclear, whether by “strategic” he is addressing the national Turkish-Kurdish conflict or the international consequences (mainly for Iraq). Once the Ilisu dam operates, Iraq will be even more dependent Turkish water policies. The livelihoods of about 6 Million people in Iraq depend on the Tigris river by using the water for irrigation or fishing. By cutting down the water flow, Ilisu will also put an end to the Mesopotamian Marshes, culturally and ecologically one of the most important areas worldwide. It also remains unclear, where the inhabitants of the almost 200 villages and hamlets in the reservoir area will be resettled and how they will be able to earn their living, as Turkish laws do not provide for the restoration of livelihoods. A number of EU export credit agencies withdrew support for the Ilisu dam in 2008 and the European Parliament demanded that Turkey stop all work on the Ilisu dam project on 2 February 2010. 

U.S. Ex-Im Satellite Loans Likely To Hit $1.4B

  (Space News, Paris, 21 September 2012) The U.S. Export-Import Bank is likely to finish 2012 having invested a record $1.4 billion in satellite projects on behalf of U.S. satellite and launch services providers, according to John Schuster, Ex-Im’s director of structured finance. “This is a huge, huge growth” for the bank, which in the past couple of years has been as active as France’s Coface export-credit agency in financing satellite investments. Answering critics who say Ex-Im, Coface and the other export-credit agencies are propping up satellite projects that have no solid business case, Schuster said Ex-Im has a requirement that the default rate on its loans not exceed 2 percent. It is now about one-half of 1 percent, he said. 

European legislation forces export credit agencies to be more transparent

(Both Ends, Amsterdam, 13 September 2011) With an overwhelming majority – 643 votes in favour, 20 against and 9 abstentions – a new law, which forces European export credit agencies (ECAs) to be more transparent about the environmental and social effects of transactions supported by ECAs, has just been approved of in the European Parliament. As of next year, all ECAs will have to deliver a report about this to the European Commission and the European Parliament on a yearly basis. European green MEPs noted that “EU Member States will have to report on how ECAs perform according to EU global goals and commitments regarding the promotion of democracy and human rights, and the fight against climate change, on how they include environmental risks in their interest calculation (environmentally unsound investment projects might be charged with higher interest rates, in order to cover their real risks).

Indian companies turn to Chinese loans to cuts export costs

(Bloomberg, 21 September 2011) Indian companies may turn to Hong Kong’s yuan bond market to raise funds at 40% the cost of top-rated home companies after India eased borrowing rules…. Rural Electrification Corp., India’s state-controlled lender to power projects, has applied to Sinosure, for a guarantee on a $350 million loan, Chairman Hari Das Khunteta said in an interview on Sept. 16….  Rural Electrification will borrow in yuan “if the terms are good and taking into account interest rates,” Khunteta said….. China, which was the biggest contributor to world growth last year, according to the International Monetary Fund, is promoting the yuan’s use in global trade and finance…. Annual trade between the world’s most populous countries will touch $60 billion in 2011.