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Ex-Im Bank Chairman Talks Satellite Investment Strategy

By | September 3, 2013
      Fred P. Hochberg

      Fred P. Hochberg, Chairman and President, Export-Import Bank of the United States.
      Credit: Ex-Im Bank

      [Via Satellite 09-3-13] The Export-Import Bank of the United States (Ex-Im Bank) recent loan of $105.4 million to Israeli satellite operator Spacecom is further evidence of the bank’s growing support for the aerospace industry in the United States. This loan will finance SpaceX’s launch of the Amos 6 communications satellite, the purchase of American made-solar arrays, and insurance brokered by Marsh USA.

      Fred Hochberg, chairman and president of the Ex-Im Bank told Via Satellite that Ex-Im Bank’s support is key for U.S. companies to strive in the industry. “Ex-Im Bank knows that if American aerospace companies are given a fair shot, they will succeed. We work to level the playing field to ensure they have that shot. Consequently, Ex-Im Bank support is necessary due to competition from foreign Export Credit Agencies (ECAs) and lack of commercial financing. Ex-Im Bank will continue to support the U.S. aerospace industry because it represents a vital source of American jobs and showcases the innovation of American exporters,” he said.

      The Ex-Im Bank has been involved in a number of deals with space companies this year. For example, in June, it authorized a $343.3 million direct loan to AsiaSat to finance the purchase of two communications satellites designed and built by Space Systems Loral (SSL). AsiaSat 6, a C-band satellite, and AsiaSat 8, a mixed Ku/Ka-band satellite, are being manufactured by SSL under a contract that was announced in November 2011. The launches are planned for the first half of 2014. In January, the Ex-Im Bank authorized an $87.1 million guarantee of a loan extended by Crédit Agricole and other European lenders to Hispasat Canarias S.L.U., a Hispasat S.A. (Hispasat) subsidiary based in Madrid, Spain, that will finance the assembly and purchase of a satellite to be manufactured by Orbital Sciences Corporation. The guarantee, which is Ex-Im Bank’s third transaction with Hispasat, will support approximately 600 U.S. jobs, according to bank estimates derived from Departments of Commerce and Labor data and methodology.

      While satellite companies have generally performed strongly in tough economic conditions in recent years, tapping into ECAs has proved a lucrative source of funding, and many operators have taken advantage of this new stream of financing to fund business plans. Hochberg believes in an “uncertain” financial climate for satellite companies to get access to funding – this is of little surprise. Spacecom’s is the latest in a number of Ex-Im Bank deals in the satellite sector, and Hochberg called it a “significant” one for the bank. “This transaction will have a significant impact for U.S. exporters and U.S. jobs in this critical sector. The Ex-Im Bank exists to support U.S. jobs by supporting U.S. exports. Ex-Im Bank support for this transaction was necessary due to the limited amount of commercial financing available for the satellite industry. The pricing and availability of financing for satellite operators, even those with strong credit profiles, is uncertain, necessitating reliance on ECAs and other non-commercial sources of finance,” he said. “Ex-Im Bank support was also necessary due to competition from foreign ECAs.”

      The good news for the U.S. aerospace industry is that the Ex-Im Bank’s continued influence in this sector is unlikely to go away any time soon. “Ex-Im Bank will continue to support the U.S. aerospace industry as needed. This sector represents a vital source of American jobs and showcases the innovation of American exporters. By the end of this fiscal year, we will have topped $1 billion in satellite financing for three consecutive years,” Hochberg said.