Ex-Im Bank to guarantee loans on Air India-Boeing deal

The U.S. Export-Import Bank and the parent of Air India on Friday concluded a deal for $548.6 million in financing to fund the airline's purchase of Boeing aircraft.

It's the latest in a string of financing arrangements set up by the Ex-Im Bank linking India with major U.S. exporters.

The fast-growing Indian market offers enormous opportunities for U.S. exporters in many sectors including transportation, energy and infrastructure development, Ex-Im Bank Chairman James H. Lambright said. We're also pleased that India has taken advantage of the new benefits offered by its participation in the Cape Town Treaty. The Cape Town Treaty is an international treaty that facilitates the cross-border financing and leasing of aircraft, helicopters and aircraft engines. Ex-Im Bank reduces its exposure fee by one-third on asset-backed financings of new U.S.-manufactured large commercial aircraft and spare engines for international buyers located in countries that ratify and implement the treaty. Ex-Im Bank's exposure fee is the risk premium that the bank charges for its export financing.

As a result of ratifying and implementing the Cape Town Treaty, Air India's parent National Aviation Company of India Ltd. saved more than $5 million on financing costs on the transaction.

We greatly value Ex-Im Bank's contribution in partnering with Air India in our project to acquire 68 state-of-the-art aircraft from The Boeing Co.,?said NACIL Managing Director Raghu Menon. nduction of these modern aircraft into our fleet will be a major step forward in making Air India a truly global airline through a significant expansion of our international network."

Standard Chartered Bank is the guaranteed lender on the transaction.

Ex-Im Bank has identified India as a key market for its export financing. In April 2008, Ex-Im Bank established the Indian Infrastructure Facility to support U.S. exports to Indian projects in sectors such as power and renewable-energy generation, oil and gas development, airport and seaport development, railway and urban transit, and health care. The facility now includes nine Indian financial institutions and has a financing capacity of $2.45 billion.

In 2007, Ex-Im Bank concluded a $1.2 billion financing of Boeing aircraft for NACIL. Accordingly, Ex-Im Bank aggregate exposure under the 2007 financing and the current financing is about $1.6 billion.

In fiscal year 2007, Ex-Im Bank authorized $12.6 billion in financing to support an estimated $16 billion of U.S. exports worldwide. The bank authorized more than $1.4 billion last year to support U.S. exports to India, including a $500 million loan guarantee to Reliance Petroleum Ltd. for an oil refinery in Jamnagar, in the state of Gujarat.

Source: American Shipper