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Presentation Euro Asian Space Week - 26 November 1998

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Telecom Satellites: Bank Financing and Insurance Requirements. Proceedings of the Euro-Asia Space Week on Cooperation in Space - "Where East & West Finally Meet", 23-27 November 1998, Singapore.

Telecom Satellites: Bank Financing and Insurance Requirements. Proceedings of the Euro-Asia Space Week on Cooperation in Space - "Where East & West Finally Meet", 23-27 November 1998, Singapore.

Published in: Economy & Finance

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  • Telecom Satellites: Bank Financing and Insurance Requirements 26 November 1998 Credit Lyonnais
  • Transcript

    • 1. Telecom Satellites: Bank Financing and Insurance Requirements Euro-Asian Space Week Singapore 26 November 1998 26 November 1998 Credit Lyonnais
    • 2. Telecom Satellites: Bank Financing and Insurance Requirements – Main points
      • Satellite Project Financing – Key Features
      • Banks requirements in terms of Insurance coverage
      • Recent Evolution in Telecom Satellite financing
      • Impact of the “Asian Crisis”
      26 November 1998 Credit Lyonnais
    • 3. I – Key Features of Satellite Project Financing
      • Future cash flows will repay the debt
      • Drawing period: 2 to 3 years before launch
      • Repayment period: 5 to 10 years after launch
      • Margins
      26 November 1998 Credit Lyonnais
    • 4. Key Features – Main Security Package
      • Before completion: strong guarantee
      • After completion:
        • pledge on all assets
        • assignment of insurance proceeds
        • assignment of satellite revenues
      26 November 1998 Credit Lyonnais
    • 5. Key Features – Market risk assessment
      • Detailed market surveys are a prerequisite
      • Commitments of distributors to buy a minimum capacity
      • Sensitivities
      • No technical risk
      26 November 1998 Credit Lyonnais
    • 6. Key Features – A strong partnership
      • Sponsors
      • Distributors
      • Suppliers
      • Insurers
      • Banks
      26 November 1998 Credit Lyonnais
    • 7. Key Features – Main issues / risk sharing
      • Risk sharing
      • Advanced testing and pre-operating phase
      • Country risk
      • Regulatory issues
      26 November 1998 Credit Lyonnais
    • 8. II – Banks requirements in terms of Insurance coverage
      • Launch and initial in orbit insurance
        • Maximum duration of the early in orbit cover
      • In orbit insurance
        • Maximum cover to limit renewal risk
      26 November 1998 Credit Lyonnais
    • 9. Insurance coverage
      • Concept of continuous coverage
      • Importance of the partial failure definition for the banks
      • Coexistence of a free re-flight or similar option with standard insurance
      26 November 1998 Credit Lyonnais
    • 10. Insurance coverage – Specific Clauses
      • The Requirement for Specific Clauses
      • ” Cut-through" clause and protection against country risk and local insurance fronting
      • ” Breach of warranty” - banks have absolutely no operational interest in a space project
      26 November 1998 Credit Lyonnais
    • 11. Insurance coverage – Banks as "Loss Payees"
      • No reason to make the payment flows more complicated
      • Importance of the quality of the insurance/reinsurance companies
      • Are Salvage Rights always necessary?
      26 November 1998 Credit Lyonnais
    • 12. Insurance coverage – Important Matters
      • Importance of banks - insurers communication
      • Importance of an insurance adviser
      • Importance of insurance matters for Crédit Lyonnais
      26 November 1998 Credit Lyonnais
    • 13. III – Recent Evolution in Telecom Satellite Financing
      • Revolution in the satellite industry – new players
      • Accelerating diversification – unproven markets
      • A critical combination of risks
      26 November 1998 Credit Lyonnais
    • 14. Recent Evolution – Impact on Telecom Satellite Financing
      • In the past, the availability of financing was hardly a problem
      • Less governmental projects and large corporate, more new ventures, smaller companies
      • Dramatic increase in financing needs
      26 November 1998 Credit Lyonnais
    • 15. Recent Evolution – End of the “Education Cycle”
      • First real non recourse, project finance transactions in satellite financing …
      • Open competition among a certain number of banks around the world
      26 November 1998 Credit Lyonnais
    • 16. Recent Evolution - New features
      • Big LEOs entered “external financing” phase of development process
      • Sponsors put pressure on banks to get non recourse financing
      • Impressive success of new financing tools
        • Market / Debt instruments
        • Vendor financing
      26 November 1998 Credit Lyonnais
    • 17. Recent Evolution – How did banks react until recently?
      • Banks continue to use their traditional and “historical in-house” tools
      • Commercial Credits vs High Yield Bonds
      26 November 1998 Credit Lyonnais
    • 18. Recent Evolution – How did banks react ? (2)
      • Banks took time to observe
      • Lack of benchmark or real life experience
      • Critical look at cash flow projections
      26 November 1998 Credit Lyonnais
    • 19. Recent Evolution - Will banks adopt another attitude?
      • Customised approach
        • Banks can be constructive and innovative
        • Banks may take the bets of new global/regional services
        • Banks may think that some recourse on shareholders is still necessary
      • Supporting vendors in their commercial approach
      26 November 1998 Credit Lyonnais
    • 20. IV – Impact of the “Asian Crisis”
      • Impact of jeopardised Asian demand for telecom services?
      • Impact of redeployment of international liquidity?
      • Worldwide impact?
      26 November 1998 Credit Lyonnais
    • 21. Impact of the “Asian Crisis” (2)
      • How long will the effects of the crisis last?
      • The existence of a market remains key question
      26 November 1998 Credit Lyonnais
    • 22. Telecom Satellite Financing and Insurance - Conclusion
      • Bankers understand what the satellite based telecom industry is going through
      • More opportunities but increasing complexity
      • More sophisticated risk sharing arrangements
      • Insurance coverage must evolve
      26 November 1998 Credit Lyonnais
    • 23. Telecom Satellite Financing and Insurance - Conclusion (2)
      • Banks can be partners to the development of innovative solutions
      • Banks to accompany the industry “as soon as possible”
      • Complementarity with other finance instruments
      • Asian Crisis – Temporary loss of appetite?
      26 November 1998 Credit Lyonnais
    • 24. THANK YOU ! Pierre-Philippe Martin Credit Lyonnais [email_address] 26 November 1998 Credit Lyonnais