FOR IMMEDIATE RELEASE February 27, 2006
Phil Cogan (202) 565-3200
WASHINGTON , D.C. --- The Export-Import Bank of the United States (Ex-Im Bank) hailed today's (Mar. 1) effective date of the Aircraft Equipment Protocol to the Cape Town Treaty and the use of the International Registry under the Treaty by calling on other countries to ratify and implement the Treaty and realize the resulting benefits.
The Cape Town Treaty and the related Aircraft Equipment Protocol is an international treaty intended to facilitate the cross-border financing and leasing of aircraft, helicopters and aircraft engines. The Aircraft Equipment Protocol becomes effective today, (March 1, 2006), which will result in the International Registry established under the Treaty accepting registrations of international interests in aircraft, helicopters and aircraft engines.
In November 2005, Malaysia became the eighth country to ratify or accede to the Treaty and the related Aircraft Equipment Protocol, which triggered the entry into force of the Aircraft Equipment Protocol four months later. In January 2006, Senegal became the ninth country to ratify or accede to the Treaty and the related Aircraft Equipment Protocol.
Besides Malaysia and Senegal, the other countries that have ratified or acceded to the Cape Town Treaty and the Aircraft Equipment Protocol are Ethiopia, Ireland, Nigeria, Oman, Pakistan, Panama and the United States.
Ex-Im Bank commends the actions of all nations that have enabled the Cape Town Treaty to move forward. We believe that the Cape Town Treaty will reduce certain risks associated with cross-border, asset-backed financings and leases of aircraft, helicopters and aircraft engines, said Ex-Im Bank Chairman and President (acting) James H. Lambright. Ex-Im Bank will continue to encourage more countries to ratify the Treaty and realize its benefits.
In explaining the significance of the entry into force of the Cape Town Treaty and the commencement of operations of the International Registry, Lambright said The Cape Town Treaty and the International Registry results in greater predictability for aircraft financiers by significantly reducing the legal risks associated with cross-border, asset-backed aircraft financings. Airlines located in countries that have ratified and fully implemented the Cape Town Treaty can anticipate increased availability of commercial aircraft financing, and more attractive aircraft financing terms. Ex-Im Bank's current policy of reducing its risk premium by one-third for aircraft financings with airlines based in countries that ratify and implement the Cape Town Treaty is one example of how the Cape Town Treaty has reduced the cost of cross-border aircraft financings. For some airlines, the benefits of the Cape Town Treaty could actually facilitate aircraft financings that may not otherwise have been available.
Since 2003, Ex-Im Bank has offered a one-third reduction of its exposure fee on asset-backed financings of new U.S.-manufactured large commercial aircraft for buyers in countries that ratify/accede to and implement the Cape Town Treaty and the related aircraft protocol (including certain optional provisions specified in letters sent by Ex-Im Bank to such buyers). Ex-Im Bank's offer currently applies to approvals issued to these buyers through September 30, 2006.
Of the nine countries that have ratified or acceded to the Cape Town Treaty to date, airlines located in Ethiopia, Pakistan, Panama, Oman and Senegal have benefited from Ex-Im Bank's improved financing terms as a direct result of their countries' ratification of/accession to the Treaty.
Ex-Im Bank's Vice President of Transportation Robert Morin said, The reduced legal risk justifies a reduction in our exposure fee, or another improvement in financing terms, for airlines based in countries that ratify and implement the Treaty. The Cape Town Treaty is intended to expand the sources of financing, increase the amount of available financing and lower the cost of financing available to airlines. This will enable airlines to upgrade their fleets, thereby supporting jobs in the aerospace industry.
Now that the Aircraft Equipment Protocol to the Cape Town Treaty and the International Registry are effective, Morin indicated that he hopes and expects other export credit agencies, commercial aircraft financiers and aircraft operating lessors to join Ex-Im Bank in factoring in the benefits of the Cape Town Treaty when structuring and pricing aircraft and aircraft engine financings.
Ex-Im Bank's current offer to reduce its exposure fee enables eligible foreign buyers to receive an Ex-Im Bank exposure fee of as low as 2 percent, a one-third reduction of the current minimum 3 percent exposure fee on asset-backed financings of new large commercial aircraft. More favorable financing terms also apply to asset-backed financings of spare engines to such buyers.
Ex-Im Bank also extends preferential financing terms to leasing companies but only if the aircraft leasing company and the airline lessee under the initial operating lease are both based in a Cape Town Treaty country and make the appropriate declarations under the Treaty and the related Aircraft Equipment Protocol.
The Cape Town Treaty (which was concluded at an international diplomatic conference held in Cape Town South Africa, in November 2001) establishes a commercially oriented, comprehensive international legal framework to protect security and leasing interests in aircraft equipment. To date, the treaty has been signed by 28 countries and ratified or acceded to by eight countries. The Cape Town Treaty and the related aircraft protocol will enter into effect on March 1, 2006.
More information on the Cape Town Treaty (formally known as the Convention on International Interests in Mobile Equipment) may be found at the web site of UNIDROIT, an independent intergovernmental organization that studies needs and methods for modernizing, harmonizing and coordinating private and commercial law as between states and groups of states. See http://www.unidroit.org/english/conventions/mobile-equipment/main.htm
Ex-Im Bank, the official export credit agency of the United States, is in its 71 st year of helping finance the sale of U.S. exports, primarily to emerging markets throughout the world, by providing loan guarantees, export credit insurance and direct loans. In fiscal year 2005, which ended September 30, 2005, Ex-Im Bank authorized nearly $14 billion in transactions supporting almost $17.9 billion in U.S. exports. For more information, visit www.exim.gov.