Narrative
Full Description
Project narrative
On October 31, 2017, ICBC Aviation Leasing Company Limited — a Chinese state-owned leasing company and a wholly-owned subsidiary of ICBC Financial Leasing Co., Ltd. (ICBCFL) — entered into a finance mandate agreement for a sale-and-leaseback agreement worth a $154 million USD with Korean Air Lines Co., Ltd. (KAL) — the flag carrier airline of South Korea headquartered in Seoul and listed on the Korea Exchange — for one Boeing 787-9 aircraft. The sale-and-leaseback agreement would place the Boeing 787-9 aircraft on an operating lease and the proceeds of it would be used by the borrower for general corporate purposes. The sale-and-leaseback agreement was secured. Financial close was achieved on December 20, 2017, the same day the aircraft was delivered via Hong Kong-incorporated leasing entity and ICBC Aviation Leasing subsidiary Hong Kong Aircraft Leasing I Company Limited to Korean Airlines.
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.