ICBC contributes to a $332 million USD syndicated loan to Southwest Airlines for general corporate and refinancing purposes

Project narrative

On April 29, 2009, a syndicate of seven banks — including the New York Branch of the Industrial and Commercial Bank of China (ICBC) — entered into a $332 million USD syndicated tern loan 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 and refinancing purposes. This loan carried a maturity period of ten years and a final maturity date of May 6, 2019, with quarterly repayments of the principal beginning August 6, 2009 (a grace period of approximately 0.271 years). This loan carried an interest rate of LIBOR plus a margin of 3.30%, with interest payable quarterly beginning August 6, 2009. This loan was secured by (i.e. collateralized against) mortgages on 14 Boeing 737-700 aircraft charged by Southwest Airlines. The proceeds were to be used by the borrower for general corporate purposes and for refinancing, namely repaying its revolving credit facility. The borrower drew down the full amount of the loan. In addition to ICBC, the following lenders contributed to the loan syndicate: Citibank N.A., Crédit Industriel et Commercial (CIC), Deutsche Bank AG, Landesbank Hessen-Thüringen (Helaba), Landesbank Baden-Württemberg (LBBW), and Norddeutsche Landesbank Girozentrale (NORD/LB). The loan was originally launched at $250 million USD before being up-sized in syndication due to demand. This was reportedly the first time a Chinese bank had issued a loan to an American airline.