Aircraft export credit costs rise

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The cost of export credit for business jets and helicopters has risen to reflect the rise in capital markets spreads.

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Export credit tems for aircraft-backed transactions

The cost of export credit for business jets and helicopters has risen to reflect the rise in capital markets spreads. It now costs more to use government guarantees than it did up at the start of 2011 when new export credit rules were introduced regardless of the strength of the borrower.  

Every quarter the OECD reviews the 90-day daily average of Moody’s credit spreads index – which is discounted to 50% to reflect the asset security – and releases minimum credit rates.

The new rates will affect any new deals unless an offer letter has already been given. Classifications are valid for 12 months when sent as part of letters of offer. They can be extended to 18 months if there is a firm commitment and commitment fees have been paid.

12-year repayment terms for asset-backed transactions

Table source: OECD

 Export credit agencies make an internal classification and then send their rating through to the other agencies. Agencies that have a relationship with the borrower – so may have financed their aircraft in the past or looked at supporting sales campaign – have the right to appeal.

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