Ex-Im Bank boosts trade

A little known US government agency is helping to ease the flow of business between the Middle East and North America.

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By  David Ingham Published  January 1, 2004

A little known US government agency is helping to ease the flow of business between the Middle East and North America. The Export-Import (Ex-Im) Bank of the United States recently helped facilitate a US $75 million deal between KSA-based aviation company, National Air Services (NAS), and plane manufacturer, Gulfstream. The deal, for three Gulfstream G300 planes, was financed by Arab Banking Corporation and guaranteed by the Ex-Im Bank. The organisation is described as an ‘independent’ federal government agency that assists in the financing of US exports. The bank does not actually lend money to purchasers, but underwrites loans granted by commercial banks — up to 85% of the value of the US goods and services — which then makes borrowers much more commercially attractive. “What, in essence, the borrower is doing is borrowing the credit of the United States, and because of the full faith there is in credit of the United States government, the financing costs are sizeably less for any transaction that we are involved in,” explains J. Joseph Grandmaison, a member of the bank’s board of directors. Its role in the NAS/Gulfstream deal was seen as a key factor in closing the transaction. Arranging the financing for any aircraft purchase, especially after 9/11, is a challenging task, and the fact that NAS is a private company added further complexities. “The involvement of the Ex-Im Bank removed all of these challenges,” says Mohammed Al Zeer, president & CEO of NAS. “What Ex-Im has done is give us that last little piece of flexibility you need to close a deal, and financing is extremely important,” agrees Bryan Moss, president of Gulfstream. Aircraft have long been a mainstay of the Ex-Im Bank’s business, but business has mainly involved large aeroplanes sold to national flag carriers. The NAS deal therefore represents a new market for the bank, as it has rarely supported a deal for commercial jets sold to a private company. “Ex-Im’s role in aircraft has [previously] been almost exclusively reserved to flag carriers… with sovereign guarantees behind them,” says Grandmaison. “That’s great business, but the [market] dynamics are changing from high government involvement to more from the private sector, and for us that’s a new field we are learning.” Ex-Im is now seeking out other deals to support in the region, especially in the area of security. “We are especially pleased with a new initiative related to transportation security, which is a big challenge for the industry, as well as for individual countries,” says Grandmaison. “Under the special initiative, we will give extended terms for any transportation [security] equipment that is purchased,” he explains.

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