Singapore, Oct 10: Qantas Airways is raising Australian dollars 350 million ($272 million) from a loan that allows it to switch the types of aircraft used as collateral, in what bankers and analysts said is the world’s first aviation financing of this type.
The loan is the first of a series under a loan facility programme set up by the Australian airline, which reported near-record profits in the year to June.
The security for each loan includes a pool of Qantas planes that have not been pledged as collateral, including Airbus SE A320 family and Boeing Co 737 narrowbodies as well as A330 and 787 widebodies, a term sheet of the deal shows.
“It also gives us more flexibility in terms of what aircraft are encumbered, allowing us to change the aircraft depending on possible fleet changes or future plans,” a Qantas spokesman said.
BNP Paribas is the sole structuring bank and, with National Australia Bank, is the joint
mandated lead arranger and bookrunner.
The eight-year loan will help Qantas refinance part of A$442 million in secured aircraft and other amortising debt that matures in the financial year ended June 30, 2018, the Qantas spokesman said.
“Qantas is trying to use this rather clever structured financing tool to monetise all its assets. Whenever aircraft is added or removed from the pool, it could result in pricing adjustments beneficial to the airline,” said Shukor Yusof, founder of aviation consulting firm Endau Analytics.
In May, Moody’s Investors Service upgraded the carrier’s credit rating by one notch to Baa2. Qantas had regained its investment-grade status from Moody’s in 2016 and from Standard & Poor’s in 2015 after slipping into junk territory in 2013.
Aviation finance is seen as attractive to banks, insurers and pension funds for providing long-term dollar-denominated returns above those of some other asset classes, on investments backed by assets that can be moved easily.
The loan facility was sold down to 10 other financial institutions and was about twice oversubscribed, according to the term sheet and sources.