Lenders shun Su‑35 financing
Private lenders are reluctant to finance high‑risk defense purchases like Indonesia’s Su‑35 program, forcing governments to use allocated public funds instead—an example of how specialized asset risk and geopolitical exposure can shut private capital markets. That dynamic underscores unique depreciation and re-marketing risk for niche equipment finance. (x.com)
Jakarta signed a $1.14 billion contract for 11 Su‑35 fighters in February 2018, but Indonesian military leaders publicly abandoned the Su‑35 option in December 2021 and instead shortlisted the Dassault Rafale and Boeing F‑15EX. (thedefensepost.com - ) (thedefensepost.com) Western sanctions and stepped‑up enforcement have forced banks to harden sanctions screening and pull back on transactions with Russian defense exposure, with legal teams and syndicate lenders citing elevated compliance and counterparty risk after Treasury moves in mid‑2024. (whitecase.com - ) (politico.com - ) (debtexplorer.whitecase.com) Global insurers and specialty war‑risk underwriters narrowed cover for aviation and maritime links to sanctioned suppliers, constraining cross‑border delivery and re‑marketing options for bespoke military airframes; Egypt’s reported cancellation of its Su‑35 program under U.S. CAATSA pressure illustrates how sanction risk translates into lost secondary markets. (allianz.com - ) (washingtoninstitute.org - ) (commercial.allianz.com) Trade and industry groups note that when private capital exits, governments and state‑backed finance or export credit facilities fill the vacuum; ITFA’s 2025 compliance paper and trade reporting show public funds and credit support are increasingly relied upon for politically sensitive procurements. (itfa.org - ) (nationaldefensemagazine.org - ) (itfa.org) For secured‑asset lenders the mechanics are concrete: niche military equipment shows slower depreciation recoveries and near‑zero remarketing liquidity, spare‑parts embargoes extend working‑capital cycles, and tightened war‑risk cover raises repossession and transport costs—pressures mirrored in wholesale/floorplan and equipment portfolios when cross‑border mobility is blocked. (marsh.com - ) (insurance-day.com - ) (marsh.com) Technology response: lenders buying into Solifi’s Open Finance Platform, Leasepath and the recent DataScan acquisition are publicly pitching faster originations, integrated inventory risk tools, and automated compliance workflows—ALL Capital and Rosenthal & Rosenthal are cited Solifi adopters that migrated to its ABL and equipment finance modules to scale originations and tighten asset management. (equipmentfinancenews.com - ) (abladvisor.com - ) (businesswire.com - ) (equipmentfinancenews.com)
