FOR IMMEDIATE RELEASE July 13, 2005
Phil Cogan (202) 565-3200
WASHINGTON, D.C. - The Export-Import Bank of the United States (Ex-Im Bank) today renewed its offer to reduce the Bank's exposure fee by one-third on asset-backed financings of new U.S.-manufactured large commercial aircraft for buyers in countries that sign, ratify and implement the Cape Town Treaty and the related aircraft protocol. The offer now covers approvals issued through September 30, 2006.
In addition, Ex-Im Bank's Board of Directors voted to invite its counterpart European export credit agencies (ECAs) to work with Ex-Im Bank to develop a common approach to offering improved financing terms to airlines based in countries that ratify and implement the Cape Town Treaty, and offered to consider transitioning to that common approach prior to the September 30, 2006 expiration of Ex-Im Bank's current improved terms.
Ex-Im Bank strongly believes that the Cape Town Treaty will reduce certain risks associated with cross-border, asset-backed financings and leases of aircraft and aircraft engines, said Ex-Im Bank President and Chairman Philip Merrill, and we hope to see more countries quickly adopt and implement the Treaty and realize its benefits.
Besides the United States, five other nations to date have ratified the Cape Town Treaty. They are Ethiopia, Nigeria, Oman, Pakistan, and Panama.
Ex-Im Bank's offer 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's Vice President of Transportation Robert Morin said, The reduced risk justifies a reduction in our exposure fee for airlines based in countries that ratify and implement the treaty. The Treaty is intended to expand the sources, increase the amount and lower the cost of financing available to airlines. This will enable airlines to upgrade their fleets, thereby supporting jobs in the aerospace industry.
In a change from its current policy, the Board also voted to extend 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 aircraft protocol.
Ex-Im Bank will offer the one-third reduction of its exposure fee (in connection with approvals issued through September 30, 2006) to buyers in any foreign country that has signed, ratified and implemented the Cape Town Treaty and the related aircraft protocol (including certain optional provisions specified in letters sent by Ex-Im Bank to such buyers).
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. The treaty has been signed by 28 countries, of which six countries already have ratified the treaty. The treaty entered into force on April 1, 2004, and will become effective as applied to aircraft and aircraft engines following the ratification of the aircraft protocol by eight countries.
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 the International Institute for the Unification of Private Law (UNIDROIT), an independent intergovernmental organization with its seat in the Villa Aldobrandini in Rome. Under Article 62(1) of the Convention, UNIDROIT is designated as Depositary of the Convention. The functions of the Depositary are set out in the Convention. 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 71st 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 2004, Ex-Im Bank supported $17.8 billion of U.S. exports to markets worldwide. For more information, visit www.exim.gov.