CIT debuts as lender on new aircraft with $40m DAE loan

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CIT Group has funded its first new aircraft delivery with a $40 million loan to Dubai Aerospace Enterprise (DAE) to finance a Boeing 777-200F on lease to Emirates Airline.

CIT Bank provided the financing, while CIT Aerospace served as asset tranche lender for the transaction. NordLB acted as the credit tranche lender.

"This long-dated, asset tranche further demonstrates the breadth of CIT's global product offering to the aviation industry," says John Morabito, senior vice president, CIT Aerospace. "We are pleased to partner with DAE in this facility, which represented a number of firsts for CIT - our first loan for a factory new delivery, our first transaction on an Emirates Airline aircraft, and our first joint-lending with NordLB."

CIT Aerospace has been on the prowl for opportunities to provide debt to the aviation sector, following its recent activity with various US airlines.

In June, CIT Bank upsized a five-year loan facility covering three Boeing 747-400 and two 767-300ER aircraft for Atlas Air Worldwide Holdings, the parent company of Atlas Air. The move followed an earlier deal in April in which the bank closed a $35.7 million secured loan facility with Atlas to back leverage two 747-400s and two 767-300ERs.

However, it was CIT Aerospace's purchase of a loan portfolio from an undisclosed European bank last year that kick-started its debt funding activity again. The lessor bought up the debt positions with four US airlines through the purchase.

"We were active as debt providers a few years ago and then we pulled back, but now we are seeing opportunities that did not exist before," said Jeffrey Knittel, president of CIT transportation finance in an interview with Flightglobal in July.

The lessor is not alone in its efforts - tighter banking regulation and fewer European lenders to the sector have prompted various financiers, such as private equity firms and insurance companies, to consider entering the aviation market as debt providers.