US exporters scramble to save deals as trade bank halts new business
[WASHINGTON] US exporters large and small scrambled on Tuesday to urge foreign customers not to abandon deals supported by the US Export-Import Bank, which will be forced to halt new business at midnight as its charter expires.
There are about 195 pending transactions still in its approval pipeline that will be frozen by the lapse, with requested amounts totaling US$9.14 billion, according to Ex-Im data circulated to Democratic lawmakers. The amounts include 14 loan guarantees worth US$3.33 billion, and 137 trade insurance requests worth US$163 million.
Companies affected range from giants including aircraft maker Boeing Co and General Electric Co to small exporters of specialty oilfield equipment.
Congress took no action to keep the 81-year-old Ex-Im operating before leaving Washington last week for an 11-day break. Democrats, moderate Republicans and exporters are pinning their hopes of renewing the bank's charter on attaching a measure to a "must-pass" transportation funding bill in July.
President Barack Obama said the lapse "means lost sales, lost customers, and lost opportunities" for exporters and vowed to fight for Ex-Im's revival.
Conservative political groups that have branded the Ex-Im bank as a purveyor of "corporate welfare" and "crony capitalism"declared a partial victory and said they would fight new legislation to renew it. "We feel that it's a huge win that the charter's going to expire," said Dan Holler, spokesman for the Heritage Action for America. "Now we need to make sure that Republican leadership in both the House and the Senate don't snatch defeat from the jaws of victory." Boeing, by far the Ex-Im Bank's largest beneficiary, faces an aircraft financing void of US$8 billion to US$9 billion this year if Ex-Im never reopens, and would have to fill about half of that through its own financing arm, Boeing Capital, according to Moody's Investors Service. "But we don't see that as a viable long-term solution," said Boeing spokesman Thayer Scott in Washington D.C., because it would reduce capital available for new airplane development.
While Boeing faces no immediate threat to its credit rating, the outlook without Ex-Im could worsen over time if other negative factors came into play, said Moody's senior vice president Russell Solomon.
Fitch Ratings managing director Craig Fraser gave a similar assessment for construction equipment maker Caterpillar Inc, another top user of Ex-Im services, adding that without the bank, its competitive position could be reduced over time.
Caterpillar said in a statement that reinstating the trade bank was a top priority and it would continue to work on Ex-Im-supported transactions so those customer transactions could proceed "as soon as the bank is renewed" Don Nelson, president of oilfield equipment maker Pro-Gauge Technologies Inc of Bakersfield, California, said he is trying to persuade a Middle East customer to wait for an Ex-Im loan guarantee on a US$30 million project and not jump to a state-supported bid from China, Canada, South Korea, or India. "Basically, we're telling them that Congress will get its act together and Ex-Im will be reauthorized," Nelson told Reuters.
General Electric said in May it would lose a US$350 million order from Angola for 100 diesel-electric locomotives to be built in Erie, Pennsylvania to China's CRRC Corp Ltd if Ex-Im closes for good.
But GE chairman Jeff Immelt said earlier this month that the industrial giant would try to keep the Angola deal from falling into the hands of the newly merged Chinese state-run train builder. "What we'll do is attempt to get other ways to get through it," Mr Immelt told reproters. "I don't want to presuppose anything right now, but we don't plan to lose business here. We don't plan to lose business."
REUTERS
No comments:
Post a Comment