Narrative
Full Description
Project narrative
On June 28, 2019, financial close was reached on a deal in which BOC Aviation Limited — a Chinese state-owned leasing company — entered into a sale-and-leaseback agreement worth an estimated $80 million USD with flynas Company LCC — a private Saudi low-cost airline headquartered in Riyadh — for two Airbus A320neo aircraft. The specific aircraft were two narrowbody Airbus A320neos. The use of the proceeds of the sale-and-leaseback agreement were to be used by Flynas for an operating lease.
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. $80 million USD was assessed by industry media sources to be the value of this sale-and-leaseback agreement.