Narrative
Full Description
Project narrative
In 2017, Bank of Communications Financial Leasing Co., Ltd. (BoCom Leasing) — a Chinese state-owned leasing company and wholly-owned subsidiary of Bank of Communications — entered into a sale-and-leaseback agreement with Korean Air Lines Co., Ltd. (KAL) — the flag carrier airline of South Korea headquartered in Seoul and listed on the Korea Exchange — for two Boeing 787-9 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. While the source only says Bank of Communications was involved, AidData has assumed that as its leasing subsidiary, BoCom Leasing was the specific funding agency.