Satellite Industry Faces Financing Struggles Without Ex-Im
The virtual shutdown of the Export-Import Bank is having devastating consequences on the U.S. commercial satellite industry, industry experts said Sept. 21 at a Washington Space Business Roundtable lunch. "It's embarrassing we're not open for business," said Jeff Trauberman, Boeing vice president-Space, Intelligence and Missile Defense Systems.
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Ex-Im financing is a staple of technology companies looking to get into the export market, with the space sector particularly dependent on its direct and guaranteed loans, said Joshua Hartman, managing partner at Renaissance Strategic Advisors, an aerospace and defense industry consulting firm. Ex-Im authority lapsed July 1, meaning it cannot take on any new business, and trying to eliminate the bank has become "a marquee issue" for some small-government lawmakers in the House who haven't let reauthorization come up for a vote, Hartman said. The bank has played a role in 60 percent of space satellite deals in recent years because credit markets are reluctant to invest in a complex industry, he said: "It's an important part of many business plan closures."
Between 2010 and 2014, Ex-Im backed $5 billion in satellite deals that represented as many as 7,000 jobs directly, said John Schuster, principal with 32 Advisors' International Trade & Project Finance practice and formerly head of the bank’s Structured Finance Division. Ex-Im could be reauthorized this month as a rider in the federal budget authorization, or in October as part of the transportation bill. But panelists all expressed pessimism at that occurring. "There's very little this Congress is passing or doing on anything," Schuster said.
Financing projects internally is often not an option, Trauberman said: "We're not a bank. There's a limit to what we can do on the finance side. [Money spent on financing] is money you don't put into R&D, you don't put into growth." The lack of an Ex-Im "will ripple back into civil space and national security space sectors," Trauberman said. Except for a couple of major space industry firms like Eutelsat and SES, no long-term financing is available at reasonable rates without Ex-Im participation, Schuster said. "The commercial sector is much more hesitant [to lend] than we ever thought."