Narrative
Full Description
Project narrative
On August 14, 2020, it was announced that Jin Shan 37 Ireland Company Limited — a wholly owned subsidiary of Bank of Communications Financial Leasing Co., Ltd. (BoCom Leasing) entered into a $266 million USD (£203.3 million GBP) sale-and-leaseback agreement with easyJet plc — a British airline — for five Airbus A321neo aircraft. This agreement carried a maturity period of approximately 9.5 years, to expire when each aircraft reached 10 years of age. As of August 2020, the aircraft varied in age from five to nine months and at March 31, 2020, had a net book value of £167 million GBP. The proceeds of the agreement were to be used by easyJet to maximize liquidity and further strengthen its financial position.
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.