Narrative
Full Description
Project narrative
In 2012, a syndicate of lenders — including the Bank of China (BOC) — entered into a Schuldschein syndicated loan agreement with Deutsche Lufthansa AG — Germany's flag carrier airline headquartered in Cologne and one of the world's largest airlines — for unspecified purposes. In addition to BOC, the following lenders contributed to the loan syndicate: Bayerische Landesbank (BayernLB), DZ Bank AG, Landesbank Hessen-Thüringen (Helaba), and Landesbank Baden-Württemberg (LBBW). BayernLB, DZ, Helaba, and LBBW served as lead banks and there were other Asian lenders on the loan in addition to BOC.
Staff comments
1. The face value in 2012 is unknown; it is known that the Schuldscheine issued in 2011 and 2011 had a total value of €500 million EUR. It is also known that the two Schuldscheine had tenors of 5.5, seven and 10 years, with fixed and floating rate coupons, although it is unclear which tenors applied to each deal. This issue merits further investigation. 2. The Schuldschein loan is a German law debt product. Schuldschein loans do not legally constitute a security: a Schuldschein is not a note or a bond. Instead, a Schuldschein loan constitutes a standardised loan contract under the German Civil Code which is evidenced by a certificate of indebtedness. The only legal function of the certificate of indebtedness is to evidence that the issuer of the certificate owes the amount set out within it (subject to its terms). The certificate does not constitute a payment claim in and of itself. Because a Schuldschein loan does not constitute a security, it cannot be listed or traded on a stock exchange. The Market Abuse Regulation, other post listing obligations and formal prospectus rules do not apply. Schuldschein loans can be secured or unsecured and can involve a single lender or multiple lenders. Typically a Schuldschein is unsecured and initially owing to a single lender who then syndicates it. This is especially the case where unregulated investors wish to invest in Schuldscheine, because investing into a Schuldschein in the "primary market" is a regulated banking activity in the form of bank lending.