Chinese lessors on the hunt for airline refinancings: bankers

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Various Chinese lessors have approached the European banking market for funding to address airline refinancing needs, say market sources.

The lessors are seeking “long-term solutions” for Chinese airline transactions, which are structured similar to finance leases, says a European banker

Another banker source indicates the lessors have approached European banks, in particular, as they are seeking to diversify away from the US dollar and into other currencies.

Both sources say the lessors hope to mandate financiers by the end of the summer.

The request for funding follows a research note issued by Fitch that suggests Chinese aircraft lessors are intensifying the competition with foreign lessors for aircraft lease deals. While foreign lessors remain the largest players in China, local companies are increasingly placing direct orders with manufacturers to grow their fleets and internationalising their operations to better compete, says Fitch.

The China Banking Regulatory Commission allowed the creation of bank-owned aircraft leasing companies in 2007. The five largest banks in China, plus policy bank China Development Bank, have since started leasing commercial aircraft, primarily on an operating lease basis, as a means to diversify their business activities and provide additional services to their existing airline clients.