Aircraft Financing – BNDES and a flightpath to recovery

As reported by the press, the Brazilian Development Bank (BNDES) approved financing for the export of 24 Embraer E175 commercial jets to a U.S. aviation company in the amount of over USD 500 million.

BNDES is the main financing agent for development in Brazil, providing financial support to businesses of all sizes in multiple sectors, including for the exports of aircraft and related parts and services.

Like export credit agencies overseas, financial support to the aircraft industry by BNDES is in line with its role of fostering advanced technology, continuous innovation, and highly skilled workers. Also, given the impact of the Covid-19 pandemic on the air transportation market, such transaction reflects the counter-cyclical role played by BNDES in Brazilian exports.

Specifically in connection with aircraft, BNDES makes available the BNDES Exim Aircraft Post-shipment Facility to finance the export of aircraft and civil aircraft engines, as well as related parts and services, and certain other technical services, as are eligible in accordance with BNDES’ financing rules (the “Facility”).

Basically, up to 85% of the export amount may be financed through the Facility, which may have a term of up to 15 years. Also, the Facility can be granted as supplier’s credit or buyer’s credit.

As one of the most traditional firms in Brazil, with more than 50 years of existence, Felsberg Advogados has already assisted financing transactions involving more than 300 aircraft over the course of its history, including several financing transactions granted by BNDES.

Considering that the worldwide public health response to the Covid-19 pandemic appears to be succeeding, we expect that a flightpath to the recovery of the aviation sector is well under way and, with the financial support of BNDES, further transactions such as the one mentioned above may soon be seen.