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France to transfer export credit programmes to Banque d’Investissement Publique

(Les Echos, Paris, 23 February 2015) It was a tough start to the week and an eventful year for Coface. The government said Monday that it planned to withdraw the management of public export guarantees from Coface to entrust them to the Banque publique d'investissement (Bpifrance). This is to bring its financing tools to boost exports of French companies together under one roof. At Bercy, the decision has not yet been taken officially but reflection "on the future of public guarantees for export, involving more than 12,000 French exporters" is well underway. It should be completed before the end of the year.

(COFACE, Paris, 23 February 2015) The French government has announced that it is reviewing a change in the management of public export guarantees from Coface SA. which  has managed state export credit insurance activity since 1946. Coface is reimbursed for its costs incurred plus compensation which amounted in 2014 to 59,9M €, or about 4% of its total turnover. Coface will engage in discussions with the state which will focus on the relevance of such a decision, as well as on the legal, social, financial and operational consequences of this move, should it be adopted.

Export credit and human rights: Failure to Protect

French Rafale Fighter Jet Wins First Export Sale

(Aviation Week, Paris, 17 February 2015) Nearly three decades after its first flight  the Dassault-built Rafale has garnered its first export sale. The Egyptian air force is buying 24 of the multi-role fighters, including 16 two-seater and eight single-seat jets. A FREMM frigate, built by French shipbuilder DCNS, is also in the offing, as are a number of missiles. These include MBDA Mica air-to-air and Scalp long-range missiles, Sagem AASM precision-guided bombs and Lacroix decoys. The contract, which is estimated at €5.2 billion ($5.9 billion), is backed 50% by France's export credit agency Coface, thanks to a pool of French banks. The financing excludes a €500-million downpayment that Cairo will pay by mid-March.

Beijing provides export credit support for military exports

(Want China Times, Beijing, 15 February 2015) One of China's top military electronics companies has secured a credit worth 35 billion yuan (US$5.6 billion) for international sales activities, reports UK-based Jane's Defence Weekly. The China Electronics Technology Group Corporation (CETC) will be granted the fund through a strategic cooperation agreement it signed with the Export-Import Bank of China earlier this month, according to China's State Administration for Science, Technology and Industry for National Defense (SASTIND). Several weeks ago, China Aerospace Science and Industry Corp (CASIC), another state-owned defense industry, obtained a credit worth 20 billion yuan (US$3.2 billion) from China Construction Bank. The SASTIND announcement shows a close tie between China's state-owned defense companies and banks. Most national defense companies have received similar credits that usually run into the billion dollar range from the banks over the last years.

Rich world ECAs helping bankroll export of coal technology-data

(Reuters, Brussels, 9 February 2015) Rich nations provided nearly $15 billion over a decade from 2003 to 2013 to fund exports of coal-fired power plant and coal mining technology, data seen by Reuters shows, defying calls to end subsidies for the most polluting of the fossil fuels... The subsidies -- provided via export credits, or preferential loans, guaranteed by governments -- will be discussed by European Union technical experts at a closed door meeting in Brussels later this month.

Export Credit guarantees look to widen Islamic finance landscape

(Reuters, London 4 February 2015) n">Credit guarantees are gaining traction in Islamic finance, helping a wider range of firms to tap the market for sharia-compliant debt, which remains stubbornly reliant on sovereign and quasi-sovereign issuers. A growing number of guarantors are developing expertise in this area, aiming to facilitate Islamic transactions both large and small. Among them is Britain's export credit agency, UK Export Finance, which plans this year to guarantee an Islamic bond (sukuk) issue for the first time under a capital market guarantee product that it launched in 2010, a UKEF spokesperson said. This would facilitate a deal for a Gulf-based customer of Airbus, whose identity has not been disclosed.

Gulf Banks Help Underwrite Region’s Aviation Boom

(Live Trading News, New York, 28 February 2015) Cash-rich Gulf banks are becoming bigger players in the region’s aviation boom, helping carriers like Emirates, Qatar Airways and Etihad Airways to fund their fleet expansion. Flush with huge cash deposits estimated at $1.15-T, Gulf banks have the firepower to be increasingly competitive in aviation lending markets. Globally, funding from some international banks has also been less available since the Y 2009 global financial crisis, although a number have made a return to the market. It gives the region’s carriers access to cheap capital, while posing a threat to the dominance of global banks and aircraft lessors which have thrived on the accelerated growth of the Gulf aviation industry. Airlines traditionally relied more on leasing firms, export credit agencies, international banks and capital markets or just cash for their financing needs. But as their order books have swollen, carriers have widened their sources of financing in order to secure competitive rates and diversify risks. Export credit, once a cost-effective mainstay for the big 3 Gulf carriers has been pushed towards market rates as a result of changes in international financing rules.

MRO reports that in recent years the flow of cheap money from European and US export credit agencies has slowed dramatically, so airlines have had to seek alternatives to fund fleet renewal and expansion.

Korean ECA supplies 60 million Euro credit to Cuba

(Business Korea, Seoul, 12 February 2015) The Korea Trade Insurance Corporation (K-sure) has signed an MOU for credit offering with the Central Bank of Cuba. The agreement is for the corporation to provide trade insurance of up to 60 million euros for Korean companies exporting their products to Cuba. The central bank is going to issue approvals for the letters of credit opened for import settlements. Prior to the agreement, guarantee had to be provided by a third-party bank in any credit transaction with Cuba, which required time and effort.

Sinosure deal suggests big plans for Chinese shipping and offshore drilling

(Global Trade Review, London, 11 February 2015) ABN Amro has signed an agreement with Sinosure which will help the Chinese export credit agency boost its funding for shipping and offshore drilling. While no specific transactions have been earmarked for partner funding, the bank’s Asia head of export and project finance Erwin Boon tells GTR that the pair are already working on a “pipeline of projects” in these areas. In the usual ECA-backed model, the Dutch-headquartered ABN Amro is likely to provide medium and long-term financing to Chinese companies operating in the sector, guaranteed by Sinosure, while the Chinese agency is also hoping to draw on the bank’s experience in the sector. Sinosure has been previously active in the shipping sector however, its involvement in offshore drilling is less established and the latest move suggests that the ECA has been given a mandate by the Chinese government to increase its coverage of this sector. “It’s clear that the Chinese government has certain plans for shipping and offshore. Shipping is already huge. Production is higher in China than in Korea [where Kexim and K-Sure have been extremely active in the sector]. The Chinese government is managing that sector and Sinosure is one of the organisations that can play a substantial role in supporting it,” Boon says.

ECIC supports the expansion of South African businesses in Africa

(Alternative Energy eMagazine, San Diego, 18 February 2015) The Export Credit Insurance Corporation of South Africa (ECIC) is actively supporting energy projects in various countries in Africa, specifically Sub-Saharan Africa, which is a key export market for the electro-technical industry in South Africa. South Africa's energy sector investment remains a focus of attention as the nation grapples with the challenges of load shedding and power constraints. With these challenges, exciting opportunities have opened up for South African manufacturers and energy businesses on the broader continent. ECIC, South Africa's government-backed export credit insurance agency, is providing these companies and projects with the backing that they need to successfully build their projects and place their footprints on the continent.

Bonny Island LNG Bribery Scandal Returns

(Morning Star, London, 20 February 2015) Recently released HSBC files reveal that the bank's Swiss branch held accounts for Jeffrey Tesler, a London lawyer who was jailed in the US for a decade-long scheme to bribe Nigerian government officials to obtain contracts to build a liquid natural gas plant on Bonny Island in Nigeria. The bribes were paid on behalf of a consortium that included Halliburton's former subsidiary, KBR, whose successor company, Kellogg Brown & Root LLC, pleaded guilty in the US in 2009 to participating in the bribery scheme and was fined $402 million by the US Department of Justice. Tessler's company Tristar, which was used as a vehicle for the bribes, is also reported to have held an account with HSBC. The same bank also held the accounts for the companies that were used to transfer the bribes and the Nigerian politicians who took the bribes. A second member of the consortium, Snamprogetti Netherlands B.V, a former subsidiary of the Italian oil multinational Eni, also pleaded guilty to bribery charges in the US. The corrupt Bonny Island project was backed by Britain's ECGD (now UKEF), Italy's SACE, the Netherlands's NCM (now Atradius) and US Exim. The disclosure of these HSBC papers raises questions of how effective ECA reporting has been and is on bribery and due diligence for the banks they provide cover for.

Lobbying on U.S. export credit agency ramps up among critics, backers

(Reuters, Washington, 18 February 2015) Clients and supporters of the U.S. export credit agency will descend on Capitol Hill next week to urge lawmakers to keep the Export Import Bank open as critics ramp up efforts to shut it down. A temporary lifeline extended last year will run out on June 30 unless Congress extends the bank's term,  a move strongly opposed by some Republicans who criticize Ex-Im's support for firms such as Boeing Co and Caterpillar Inc as corporate welfare.

Coalition lobbies US Export-Import bank on Barrier Reef

(Sierra Club, Washington 11 February 2015) A coalition of scientists, business owners, Australian elected officials, and civil society groups from the U.S. and Australia -- including the Sierra Club and  Friends of the Earth U.S. -- sent a letter to U.S. Export-Import Bank (Ex-Im) Chairman Fred Hochberg calling on the Bank to reject any proposal to finance Adani's massive Carmichael coal mine and associated railways and export terminals in Australia. If completed, coal from Australia’s Galilee Basin will be mined and transported by rail to the coast, where it will be shipped overseas through ports expanded by dredging three million tonnes of seabed from the bottom of the Great Barrier Reef (GBR). Reports indicate that Ex-Im is considering financing the project with U.S. tax dollars, contradicting the spirit of President Obama’s Climate Action Plan and recent climate progress both in the U.S. and abroad.