Qantas raises A$350m in loan that allows switching of aircraft collateral
SINGAPORE: Qantas Airways is raising A$350 million (RM1.48 billion) from a loan that allows it to switch the types of aircraft used as collateral, in what bankers and analysts said is the world’s first aviation financing of this type.
The loan is the first of a series under a loan facility programme set up by the Australian airline, which reported near-record profits in the year to June.
The security for each loan includes a pool of Qantas planes that have not been pledged as collateral, including Airbus SE A320 family and Boeing Co 737 narrowbodies as well as A330 and 787 widebodies, a term sheet of the deal shows.
“It also gives us more flexibility in terms of what aircraft are encumbered, allowing us to change the aircraft depending on possible fleet changes or future plans,” said a Qantas spokesman in response to a query.
BNP Paribas is the sole structuring bank and, with National Australia Bank, is the joint mandated lead arranger and bookrunner.
The eight-year loan would help Qantas refinance part of A$442 million in secured aircraft and other amortising debt that matures in the financial year ended June 30 next year, said the Qantas spokesman.
“Qantas is trying to use this rather clever structured financing tool to monetise all its assets. Whenever aircraft is added or removed from the pool, it could result in pricing adjustments beneficial to the airline,” said Shukor Yusof, founder of aviation consulting firm Endau Analytics.
In May, Moody’s Investors Service upgraded the carrier’s credit rating by one notch to “Baa2”.
Qantas had regained its investment-grade status from Moody’s last year and from Standard & Poor’s in 2015 after slipping into junk territory in 2013.
Aviation finance is seen as attractive to banks, insurers and pension funds for providing longterm dollar-denominated returns above those of some other asset classes, on investments backed by assets that can be moved easily.
The loan facility was sold down to 10 other financial institutions and was about twice oversubscribed, according to the term sheet and sources. Reuters