Posted by By Omoh Gabriel, Business Editor on
THE Export-Import Bank of the United States (EXIM Bank) has disclosed its plan to finance the aviation industry in Nigeria. This is part of a financial package being offered by the bank to countries which have signed and ratified the Cape Town Treaty of which Nigeria is one.
THE Export-Import Bank of the United States (EXIM Bank) has disclosed its plan to finance the aviation industry in Nigeria. This is part of a financial package being offered by the bank to countries which have signed and ratified the Cape Town Treaty of which Nigeria is one.
The bank said it has renewed its offer to reduce its exposure fee by one-third on asset-backed financing 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, according to the bank, 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 EXIM 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 EXIM Bank's current improved terms.
EXIM Bank President and Chairman, Philip Merrill, said "EXIM 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, 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.
EXIM Bank's offer enables eligible foreign buyers to receive an EXIM Bank exposure fee of as low as 2 percent, a one-third reduction of the current minimum 3 percent exposure fee on asset-backed financing of new large commercial aircraft. More favorable financing terms also apply to asset-backed financing of spare engines to such buyers.
EXIM 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. EXIM 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 EXIM 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.