Saturday, April 11, 2015

Ex-Im Bank Approves $22M Financing For Company Based in Rome, Not U.S. (#BIT: #FNC)

The Export-Import Bank of the United States (Ex-Im Bank) is an "independent" federal agency. It's function is to support U.S. exports by providing funding though loans, letters of credit and other credit enhancing products. 

The Bank recently came under fire for, among other things, competing with and disenfranchising the private sector. You can read more about the bank and the implications of its closure for investors in a piece I wrote entitled Export-Import Bank Shut Down In 2015? How It May Impact Your Portfolio

Contrary to what many believe, 98% of the bank's transactions serve the needs of small business. The bank approved $20.5 billion in 2014 and these loans supported/backed $27.5 billion in U.S. export sales.

Yesterday the Ex-Im Bank approved a $22.4 million loan for AW139 helicopters to a company called North Pole Investments, an aviation lessor based in Panama City. North Pole's primary customer is Helistar S.A.S, a civil charter services operator from Columbia. 

The helicopters are made by a company with operations in Philadelphia, PA, called AgustaWestland, but AgustaWestland is a wholly-owned subsidiary of Finmeccania S.p.A (BIT: FNC, trading at €11.81) based in Rome. It is also one of the main global players in the defense industry. The deal will be co-financed by with Italy's export-credit agency, Servizi Assicurativi del Commercio Estero, S.p.A. (SACE),

According to the announcement from the Ex-Im Bank, the work from the loan will support an estimated 200 jobs in AgustaWestland's U.S. based supply chain. In total, the company has 600 U.S. workers. 

This will be the fourth financing made to AgustaWestland for helicopters purchased in Latin America. I'm not saying this is a bad transaction, especially if it helps increase decent paying jobs in the U.S., but I find it hard to believe it needed funding support from the U.S Ex-Im Bank, especially since the Bank only provided a letter of credit. 

If you like what you're reading, please join my mailing list to receive blog posts and updates as they occur. If you're an investor with all of your assets tied up in the stock market and cash, you might want to consider a few diversification strategies. Gold is the oldest asset in the world and it's inflation proof. Bitcoin is the gold standard for the cryptocurrency world, which is the fastest growing asset class in the world. Diversifying your portfolio into one or both of these assets can help to insure your portfolio against a stock market crash or inflation. Most importantly, it can help to safeguard the gains you've made over the last 10 years.

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