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Overview

CDB Leasing enters into a $172 million USD sale-and-leaseback agreement with TORM A/S for nine MR vessels

Commitments (Constant USD, 2023)$158,608,362
Commitment Year•2021Country of Activity•DenmarkDirect Recipient Country of Incorporation•DenmarkSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Pipeline: Commitment

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Oct 12, 2021
Last repayment (originally scheduled)
Mar 31, 2032

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 companies

  • China Development Bank Financial Leasing Co., Ltd. (CDB Leasing)

Receiving agencies

Private Sector

  • TORM A/S (now TORM plc)

Loan description

CDB Leasing enters into a $172 million USD sale-and-leaseback agreement with TORM A/S for nine MR vessels

Interest rate (t₀)•5.8%Interest type•Fixed Interest RateMaturity•10 years

Narrative

Full Description

Project narrative

On October 12, 2021, China Development Bank Financial Leasing Co., Ltd. (CDB Leasing) entered into a $172 million USD financial sale and lease-back agreement with TORM A/S. The agreement carried a maturity that ranged from seven to ten years with final maturity on December 31, 2029 or March 31, 2032 respectively, and a fixed interest rate of 5.8%. The agreement included a fixed rate bareboat charter hire ranging from $5,900 USD/day to $6,590 USD/day and was payable in monthly installments. The agreement had no financial covenants. The agreement included nine MR vessels built between 2010 to 2012. TORM A/S is the bareboat charter and CDBL is the owner of vessel. TORM A/S held a purchase option on the vessels.

Staff comments

1. Torm A/S is based in Copenhagen, Denmark. It is a shipping company that owns and operates product tankers. The company's product tankers carry refined oil products such as gasoline, jet fuel, naphtha and diesel oil. 2. 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. 3. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products.