On Friday 1 April 2016, U.K. Export Finance ("UKEF"), the official UK Export Credit Agency ("ECA") of the United Kingdom, placed a temporary hold on all guarantees and credit export support of Airbus products, a move which was followed by both COFACE (the French ECA) or Euler Hermes (the German ECA) on 10 April 2016.

As of today it remains unclear exactly what the reason for the interruption in ECA support is, but UKEF has made reference to "inaccuracies" in a number of applications made by Airbus for ECA support and have advised that unless and until Airbus provide satisfactory assurances in relation to its dealing with "overseas agents" the suspension will remain in place.

Recommencement by UKEF's of support for Airbus products is now in the hands of the Serious Fraud Office of the United Kingdom which will determine if and when the suspension is lifted. In Germany the Ministry of Economic Affairs and Energy is undertaking its own investigation, whilst the French Treasury Department, which manages guarantees for French product, has declined to comment as this stage.

The ECA's decision to suspend support will create similar issues for Airbus as Boeing experienced as a result of US Ex-Im's hiatus on support of Boeing product in late 2015. In that case there was a period of six (6) months during which US EX-IM's service was suspended prior to the U.S. Congress approving its re-authorisation.

Currently only around seven per cent. (7%)  of Airbus products are supported by the ECAs and with the commercial markets buoyant we would not expect there to be an issue with the effected ECA borrowers obtaining interim funding elsewhere, indeed in the past week we have already seen effected airlines put in place temporary bridge financing, whilst others are planning to purchase aircraft directly with a view to refinancing with ECA support at a later date. That said for airlines which look to ECA support as their first and only option for funding the purchase of new aircraft the current situation could prove much more difficult to manage, especially if it continues longer term.

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