For decades, defence companies have offered governments that buy their equipment valuable sweeteners, from building factories to financing aerospace, energy or infrastructure projects. The practice is shrouded in secrecy and very few companies tell their investors about it.
The Financial Times for the first time has calculated the value of the yet-fulfilled promises the world’s biggest defence companies have made, allowing investors to compare their relative exposure.
Despite a conservative methodology, the overall obligation of the west’s 12 biggest defence companies tops $75bn – more than the US’s annual foreign aid budget.
Analysts expect the number to double within the next five years as Asia and the Middle East embark on a military equipment shopping spree, creating an unprecedented challenge for the world’s biggest defence companies.
Sources: IHS Jane’s, Sipri, Bloomberg, Avascent