Narrative
Full Description
Project narrative
In the week prior to July 10, 2012, ICBC Financial Leasing Co., Ltd. (ICBCFL) — a Chinese state-owned leasing company and wholly-owned subsidiary of the Industrial and Commercial Bank of China (ICBC) — entered into a sale-and-leaseback agreement worth $210 million USD with VistaJet Group Holding S.A. — a then-Baar, Switzerland privately-owned business airliner and one of the largest business jet owners in the world— for five Bombardier Global 6000 aircraft. Export Development Canada (EDC) issued an export credit facility to ICBCFL's Irish subsidiary to support this sale-and-leaseback agreement, with ICBCFL, in turn, leasing the aircraft to VistaJet, with the aircraft listed on Malta's aircraft registry. The acquisition of the five aircraft was expected to expedite VistaJet's fleet expansion program amidst a fast growing market. Since the aircraft's financing went through Dublin, Ireland, ICBCFL did not need approval for China's State Administration of Foreign Exchange (SAFE), a process that can take months for a leasing company seeking to lend dollars. This was the first time a Chinese financial institution had received export credit support under the then- new OECD Aircraft Sector Understanding (ASU) rules and the first time a Chinese institution had financier foreign business aircraft.
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. In 2016, VistaJet moved its corporate headquarters to Malta, where many of its planes were already registered, from Baar, Switzerland.