Narrative
Full Description
Project narrative
Prior to October 2021, ICBC Financial Leasing Co., Ltd. (ICBCFL; ICBC Leasing) — a Chinese state-owned leasing company and wholly-owned subsidiary of the Industrial and Commercial Bank of China (ICBC) — entered into a sale-and-leaseback agreement worth with Asiana Airlines, Inc. — a South Korea-incorporated airline headquartered in Seoul and listed on the Korea Exchange with KUMHO Engineering & Construction Co., Ltd. as its largest shareholder (30.77% stake as of October 2021) — for five Airbus A350-900 aircraft and five Airbus A321neo aircraft. ICBCFL also provided pre-delivery financing (PDP) for the five Airbus A350-900 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. ICBC Leasing was involved in a number of sale-and-leaseback agreements with Asiana prior to October 2021 (the earliest timestamp mentioning the 10 aircraft deal) that included the covered Airbus A350-900 aircraft and Airbus A321neo aircraft. It is possible the figure was an aggregation, and therefore AidData has already partially or even fully captured this in other records. This issue merits further investigation.