Globe and Mail
October 19, 2002

EDC has recently faced criticism that the Crown corporation may have
too many eggs in too few baskets by weighting its lending so heavily in
tech and aerospace.

(Excerpt)

Export Development Canada argued yesterday that
it has sufficient funds to cover the risk of bad loans to customers of
Canadian aerospace and information technology exporters.

EDC, which assists exporters by providing loans to foreign customers
but primarily provides insurance to Canadian exporters, has recently
faced criticism that the Crown corporation may have too many eggs in
too few baskets by weighting its lending so heavily in tech and
aerospace.

The aviation industry has fallen on hard times, with business and
vacation travel down, while the once booming telecommunications
industry has retrenched badly, in part from financing difficulties.
Transportation giant Bombardier Inc. and telecommunications equipment
maker Nortel Networks Corp. are heavy exporters and have customers that
have received EDC financing.

EDC’s 2001 annual report notes that 51 per cent of the Crown
corporation’s loans were to companies in the aviation and information
technology industries, or around $10.7-billion out of its total
$21-billion lending portfolio.

EDC spokesman Rod Giles argued yesterday that the corporation lends
money to numerous companies globally in aviation and telecom, thereby
diversifying its risks.

“Our business is risk management. We’re not dealing with a group of
bureaucrats who are lending money without any accountability here,” Mr.
Giles said. “To suggest in any way that EDC is not capable of managing
the risks that it takes on behalf of Canadian exporters is simply not
true.”

Worsening lending risks, however, have hurt EDC’s profit. The corporation depends on profit from loans to fund its lending.