By Daniel Hunter
"Commercial finance and liquidity may be readily available at the moment, but the aviation sector also needs to consider capital markets as a source of future funding," that is the message UK Export Finance’s Head of Aerospace, Gordon Welsh, delivered yesterday (Monday) to delegates at International Society of Transport Aircraft Trading (ISTAT) Conference in Istanbul.
UK Export Finance (UKEF), the UK’s export credit agency, supports UK exporters with a range of insurance, guarantees, and direct lending facilities that complement funding available from the commercial sector. The aviation industry is a very important sector to UKEF.
Anticipating a debate about the relative merits of commercial debt compared to use of capital markets for the aviation sector, Mr Welsh believes that while commercial debt is currently attractive to the aviation sector, ahead of the introduction of Basel III and adoption of its leverage ratio, capital markets have the potential to offer stability in both liquidity and pricing.
Addressing delegates, Mr Welsh said:
"There is a clear role for export credit agencies in the future funding of the aviation sector. By filling the gaps in private sector finance provision we increase capacity.
"With successful products already supporting the industry, we can also take a long term view, working closely with our French and German colleagues and considering innovative features such as pre-funded bonds that can be structured, or instant bonds capable of being issued on a drawdown basis. These are initiatives with the potential to help secure the future of the aviation industry."
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