A new Sector Understanding on Export Credits for Civil Aircraft entered into force effective 1 July 2007
(ASU).
AWG has prepared a
statement
on and short summaries (
summary 1 and
summary
2) of the new ASU.
The attached AWG summaries of the ASU are selective. They only address the essential and framework points in the new ASU, seen from the vantage point of users of export credit.
These summaries provide neither legal advice on nor interpretations of the new ASU. They may not be relied upon for any purpose.
The ASU ‘succeeds’ the existing Aircraft Sector Understanding applicable since 1986
(current ASU). That means that the terms of the ASU apply to all export credit, except for
grandfathered transactions (see attached summaries). The participant countries to the new ASU acting through their export credit agencies may apply the current ASU for all grandfathered transactions within its terms.
Main features of the ASU include:
(i) different terms depending on category of aircraft;
(ii) greater differentiation of premium, based on the credit risk of the borrower;
(iii) common credit risk rating of borrowers and classification of them by the export credit agencies;
(iv) somewhat higher premium, and inclusion of discounts for the ratification (with the qualifying declarations) of the Cape Town Convention; and
(v) regular reviews of its terms permitting adjustment to its provisions.
AWG actively monitors implementation of
the ASU and consults widely thereon with the air transport sector, to determine the extent to which
the new ASU achieves its objectives in practice.
In 2008, AWG commissioned a study from Dr.
Vadim Linetsky of Northwestern University. The study applies
Professor Linetsky's Dynamic Asset Financing Model ('DAFIM')
to assess the terms of ASU.
The OECD is currently reviewing the terms of the ASU.
That review will be completed in 2010. Un that
connection, AWG is
recommending a single-system with uniform pricing and terms for
aircraft covered by the ASU.
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