Narrative
Full Description
Project narrative
On February 7, 2022, financial close was reached on a deal in which CDB Aviation Lease Finance DAC — the wholly-owned Ireland-based subsidiary of China Development Bank Financial Leasing Co., Limited (CDB Leasing) — entered into a sale-and-leaseback agreement worth an estimated $250 million USD with flynas Company LCC — a private Saudi low-cost airline headquartered in Riyadh — for five Airbus A320neo aircraft. The use of the proceeds of the sale-and-leaseback agreement were to be used by Flynas for general corporate purposes. CDB Aviation won a mandate for the sale-and-leaseback agreement in late January 2022 before financial close. All aircraft under the deal were scheduled to be delivered by July 2022. CDB Aviation delivered the first A320neo in Toulouse, France on or around February 18, 2022. CDB Aviation delivered the second A320neo in Toulouse on March 21, 2022.
Staff comments
1. A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. The lessor is the legal owner of the asset, while the lessee obtains the right to use the asset in return for regular rental payments. Under a capital lease (a financial arrangement where the lessee/borrower uses an asset and pays regular installments plus interest to the lender/lessor), rental payments are usually classified as interest and obligation payments, similarly to a mortgage (with the interest calculated each rental period on the outstanding obligation balance). AidData codes capital leases as loans. 2. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products. 3. $250 million USD was assessed by industry media sources to be the value of this sale-and-leaseback agreement.