The UK's Export Credit Guarantee Department has completed its first aircraft securitisation, but without the involvement of its German and French counterparts, Hermes and Coface.
ECGD says its partners 'did not want to come with us on this' and that its government approval was hard won. 'We have done battle with the [UK] Treasury but we have finally got to a position where they were happy for us to go ahead.'
Arranged by Daiwa Europe, the deal finances £51.3 million ($81.1 million) or 85 per cent of the cost of one of the 10 Airbus A330s ordered by Malaysian Airlines. 'Rather than use banks to finance those loans to airlines backed by ECGD we have used the capital markets,' says Daiwa's Richard Sullivan.
OECD regulations stipulate that an export credit agency cannot guarantee funds exceeding the percentage of the national content of an aircraft, which previously limited the ECGD to funding about 26 per cent of an Airbus. To overcome this problem, four aircraft were aggregated to obtain the cover for one.
The remaining 15 per cent of the aircraft cost is believed to have come from a $25 million loan from Daiwa Europe Bank to MAS, making a total financial commitment of some $106 million.
The UK ECA offers a 100 per cent guarantee on the airline's loan repayments, which are amortised over 11.5 years. A UK-based, non-credit rated special purpose company will raise the loan through an issue of sterling floating rate notes. Excluding the ECA's premium, MAS is said to be paying Libor plus 25 basis points.
Source: Airline Business
