Space News - March 24, 2021

Once a critical pillar for supporting commercial space projects around the world, export credit agencies have faded from the limelight in an industry awash with financing alternatives.

But as an Indonesian satellite secures ECA support and Canada’s Telesat explores the option for its LEO constellation, there is still a role to play for these state-backed institutions.

ECAs came to the fore in the wake of the 2008-2009 financial crisis, helping space companies secure billions of dollars in funding as bank financing dried up and bond markets became problematic.

U.S. Ex-Im Bank, Export Development Canada and France’s Bpifrance (formerly Coface) became prominent industry influencers in the West, supporting satellite projects that fuel businesses in their home countries.

It was the attractiveness of a Coface-backed financing package that ultimately pushed Iridium Communications to choose Europe’s Thales Alenia Space over U.S.-based Lockheed Martin to build its $3 billion constellation, the satellite operator’s CEO Matt Desch told SpaceNews in an interview.

Desch said the $1.8 billion of relatively low interest, long-term ECA-backed debt it secured in 2010 was “absolutely critical” for the company at the time.

“It fit perfectly the profile of a big satellite megaconstellation build,” he said.

However, ECA debt is also notoriously restrictive, limiting shareholder dividends and the types of projects a company can invest in.

As Iridium’s risk profile improved, so did the credit markets, and in 2019 the company refinanced all of the ECA debt on better terms in the private market.

The prevalence of ECAs elsewhere in the industry also diminished amid the wider availability of funding sources. Ex-Im being embroiled in a political tussle that shut its doors to large deals from 2015 to 2019 did not help matters.