May 24, 2022

Is it even possible for export credit agencies to exist?

2 min read

Once a vital pillar in the funding of commercial space programs around the globe, Export credit agencies have disappeared from view in a market awash in financing options. However, as an Indonesian satellite receives ECA funding and Telesat investigates the possibility of an LEO constellation, such state-backed agencies also have a part to play. Following the financial downturn of 2008-2009, ECAs rose to prominence, assisting space firms in securing billions of dollars of finance as bank finance dried up as well as bond markets became volatile.

Export Development Bank of the United States of America Canada’s Bpifrance (previously Coface) and France’s Bpifrance (previously Coface) are major market influencers in the West, funding satellite ventures that benefit their home countries’ economies. According to the Chief executive, Iridium Communications chose Thales Alenia Space of Europe over Lockheed Martin of the United States to develop its $3 billion constellations because of the advantages of a Coface-backed funding program Matt Desch of the satellite operator. Desch described the $1.8 billion of comparatively low-interest, long-term ECA-backed debt the organization raised in 2010 as “highly crucial” at the time.

He stated, “It precisely suit the profile of a major satellite megaconstellation build.” On the other hand, ECA debt is infamous for being conservative, restricting shareholder returns and project forms. The financial markets changed as Iridium’s risk rating strengthened, and in 2019, the firm refinanced much of the ECA liabilities in the private sector on better terms. Due to the increased availability of financing outlets, the incidence of ECAs in other parts of the market has also decreased. Ex-involvement It’s in a diplomatic squabble that caused the company to close its doors to big transactions from the year 2015 to 2019 did not improve matters.

That may be about to improve when the pandemic emphasizes the importance of the space sector and operation increases around the board. Following Brexit, the United Kingdom intends to use its UKEF export credit company to expand its share of the worldwide space industry. “We also greatly widened access to our service this year, which has resulted in a large rise in demand for our services across several U.K. exporting sectors,” a UKEF spokesperson stated.

“We have seen a huge market in the broader aerospace market, and we have now pledged £8 billion to UK airlines which the pandemic has impacted.” The United Kingdom government announced earlier this year that space exports in 2019 totaled £5.5 billion. Exports account for over a third of the sector’s revenue. According to the spokesperson, the amount of money UKEF invests in the space business would be determined by demand and the degree of support the industry receives from the private industry.

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