TXF data update: Export finance volumes double in 2016
Export finance volumes recovered in 2016. The Middle East accounted for a third of the total ECA market, power was the most popular industry for ECA-backed deals, and Japanese direct lending came back to the market.
Global ECA finance volumes have nearly doubled to $124.9 billion in 2016 compared to $84.63 billion in 2015 – a year-on-year increase of 48%, according to TXF’s Export Finance Report 2016.
The drivers and brakes on growth for the year were as follows:
Aircraft was the least active ECA-backed export finance markets in 2016, although lack of access to ECA funding merely resulted in more commercial bank and captive finance deals from the big two aircraft manufacturers, and no dent in their respective order books.
Shipping volume was not much better than aircraft, with total volume down to around $14 billion due to a 66% drop in non-cruise line business. The only positive in the shipping market was ECA-backed deals for the major cruise lines. That trend will continue. The major liner builders have order backlogs beyond 2020, and 2017 has kicked off with large new liner orders from both Carnival and Norwegian Cruise.
The Middle East was the most active ECA-backed region in 2016 (30% of the total market) – symptomatic of many GCC states facing budget deficits and ratings downgrades, some for the first time. State-owned borrowers across the region have broadened their financial toolkits in a bid to get the best debt pricing available, namely ECA-backed and pre-export loans.
Projects that have not taken the ECA route have been non-oil or oil-based export schemes that are higher up the added-value chain. In short, there appears to be a new urgency to economic diversification in the Middle East.
Russia appears to be the second largest market despite US/EU sanctions. But much of that volume is DFI/ECA debt for the Yamal LNG project, and with that removed from the total, ECA deal flow into Russia drops to around $2 billion.
Japanese lenders, led by NEXI and JBIC with its new budget for projects that do not meet its usual lending criteria, have stormed back to pip China for the top spot in terms of export support volume.
Emerging markets deal volume continues to outstrip developed markets. The aggregation of ECA-backed deals by country reached 54.9% of global volume during 2016 with $71.28 billion of ECA support.
Power was the most popular industry for ECA-backed deals in 2016, claiming 35.3% of the market.
Average ticket size went up to $90.5 million in 2016, and average tenors climbed to 11.8 years compared to 7.5 years in 2015. This reflects increased project lending and banks favouring stronger credits. Banks are being pickier about the lenders they support and choosing to come in with larger tickets for those favoured borrowers (page 18).
JBIC was the largest supporter of all the ECAs, drastically increasing its support to $13.3 billion in 2016.
Sberbank was overall top lender to emerging markets in 2016, followed by ING Bank. The ranking is an anomaly caused by Sberbank's generous participation in the Yamal LNG project financing.
TXF will be examining these trends in more depth at TXF Venice 2017, its flagship conference for the export and project finance community.
While TXF Data is an ever-growing source of information on deals and trends out of the export finance industry, it does not claim to be comprehensive and is indicative of the detail provided to us.
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