Bank of China contributes to the $350 million USD up-sizing of a $3.333 billion USD syndicated loan to Southwest Airlines for general corporate purposes (Linked to Record ID#106555)

Project narrative

On March 30, 2020, a syndicate of 10 banks — including the New York Branch of the Bank of China (BOC) — entered into a $3,333,333,333.00 USD term loan credit facility agreement with Southwest Airlines Co. — a Texas-incorporated major American airline headquartered in Dallas, Texas and listed on the New York Stock Exchange — for general corporate purposes. This loan carried a maturity period of 364-days and a final maturity date of March 29, 2021 and a variable interest rate based on either LIBOR (with interest rates selected by the borrower) or an alternative base rate (the highest of the Wall Street Journal prime rate, one-month adjusted LIBOR (one-month LIBOR plus a statutory reserve rate) plus 1%, or the New York Fed Bank Rate plus 0.5%) plus a margin dependent on the borrower's debt rating from S&P or Moody's where if the rating was greater than or equal BBB or Baa2 the margin would be 2.000% for LIBOR loans or 1.000% for base rate loans and if the rating was less than or equal to BBB- or Baa3 the LIBOR margin would be 2.250% and the base rate margin would be 1.250% (at the time of signing, the debt rating was Baa1 from Moody's and BBB from S&P, thus the margin was 2.250% or 1.250%). The LIBOR rate and the base rate were both subject to a floor of 1% per annum. This loan included an uncommitted accordion increase provision to permit additional term loans up to $416,666,667 USD and commitment fees of unused portions of it. This loan was secured by (i.e. collateralized against) 52 Boeing 737-800 aircraft, 56 Boeing 737-8H4 aircraft, 35 Boeing 737-7H4 aircraft, and five Boeing 737-7BD aircraft (148 total aircraft) and related assets each with a minimum appraised value ratio requirement as charged by Southwest Airlines per a Mortgage and Security Agreement dated March 30, 2020 with JPMorgan Chase Bank as collateral agent. This loan was an amendment-and-restatement of a $1,000,000,000.00 USD 364-day term loan credit facility dated March 12, 2020 with JPMorgan Chase Bank, N.A., Bank of America, N.A., and Wells Fargo Bank, N.A., with $2,333,333,333.00 USD of further commitments, with amended pricing and covenants and new security. The proceeds were to be used for general corporate purposes by the borrower. BOC contributed $400,000,000.00 USD to the loan syndicate. Record ID#106555 captures BOC's contribution. In addition to BOC, the following lenders contributed to the loan syndicate: JPMorgan Chase Bank ($500,000,000.00 USD), Bank of America ($500,000,000.00 USD), BNP Paribas S.A. ($500,000,000.00 USD), Morgan Stanley Bank, N.A. ($400,000,000.00 USD), Wells Fargo Bank ($333,333,333.33 USD), Citibank, N.A. ($250,000,000.00 USD), Goldman Sachs Bank USA ($250,000,000.00 USD), Standard Chartered Bank plc ($150,000,000.00 USD), and Comerica Bank ($49,999,999.67 USD). JPMorgan Chase Bank served as administrative agent. JPMorgan Chase Bank, BofA Securities, Inc., and BNP Paribas served as joint lead arrangers and joint bookrunners. BOC NY Branch, Morgan Stanley Senior Funding, Inc., and Wells Fargo Bank, N.A. served as documentation agents. On April 1, 2020, Southwest drew down the $2,333,333,333 USD in new commitments under 364-day credit agreement, having already drawn down the $1 billion USD. On April 24, 2020, the borrower drew down an additional $350 million USD under the $417 million accordion feature. The incremental lenders to this are unclear, but it is assumed that all lenders, including BOC, contributed. BOC's contribution to this up-sizing is captured via Record ID#106556. In the second quarter of 2020, the borrower fully repaid and terminated the term loan facility.