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Overview

Bank of China Hong Kong contributes to a $385 million USD syndicated loan to Qantas for the acquisition of two A380s and one A330 aircraft

Commitments (Constant USD, 2023)$42,253,383
Commitment Year•2008Country of Activity•AustraliaDirect Recipient Country of Incorporation•AustraliaOverseas Jurisdiction•Hong Kong (China)Sector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Pipeline: Commitment

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Apr 24, 2008
End (planned)
Dec 31, 2008
Last repayment (originally scheduled)
Apr 21, 2020

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Commercial Banks

  • Bank of China (Hong Kong) Limited (BOCHK)

Receiving agencies

Private Sector

  • Qantas Airways Limited

Loan description

Bank of China Hong Kong contributions to a $385 million USD syndicated loan to Qantas for the acquisition of two A380s and one A330 aircraft

Interest type•Variable Interest RateMaturity•12 years

Narrative

Full Description

Project narrative

Between April 18 and 24, 2008, Bank of China (Hong Kong) Limited (BOCHK) entered into an agreement with Australian flag carrier airline Qantas Airways Limited to arrange a $385 million USD-equivalent syndicated loan for aircraft acquisition. This loan was a dual-currency facility that carried a maturity period of 12 years, an interest rate of LIBOR or BBSY plus a margin of 75 basis points (bps), and a commitment fee of 30 bps; the amortizing credit features an average life of about 7.5 years. The proceeds would be used by the borrower to purchase two Airbus A380 aircraft and one Airbus A330 aircraft, to be delivered in 2008. BOCHK served as the sole mandated lead arranger and bookrunner for this loan. It launched general syndication for the loan in the second-to-last week of May 2008. Banks could join the facility at three levels: as lead arrangers (committing $30 million USD or more), as lead managers (committing between $20 million USD and $29 million USD), and managers (committing between $10 million USD and $19 million USD). Banks had until the middle of June to revert.

Staff comments

1. AidData has not yet discovered direct evidence that this loan reached financial close. However, AidData considers the fact that BOCHK agreed to arrange the loan as the sole mandated lead arranger and that it had launched the loan into general syndication as sign of a commitment. Therefore, it has coded the project_status field as Pipeline: Commitment. Additionally, to estimate BOCHK's contribution, AidData has coded $30 million USD as the transaction_amount field, as this was the amount banks joining the loan would have to commit to become lead arrangers. While BOCHK could have possibly syndicated out and ended up contributed less, in all likelihood as the sole arranger it contributed the largest amount to this loan, which would certainly be larger than the $30 million USD contribution of lead arrangers that joined in syndication. 2. "Qantas Airways Limited Annual Report 2008", covering July 1, 2007 to June 30, 2008, mentions several aircraft acquisition efforts that may have been associated with this loan. In September 2008, Qantas received its very first A380 for its fleet. Additionally, Qantas purchased three A330-200 aircraft (see page 53) and between June 30 and October 1, 2008, one A380 and one A330-200 were scheduled to enter service (see page 23). "Qantas Airways Limited Annual Report 2009", covering July 1, 2008 to July 1, 2009, further mentions the delivery of two A380s on December 16 and 27, 2008 (see page 20) and the delivery of three A330-200s during the 2008/09 financial year (see page 18). It is very likely that these deliveries were associated with this loan.