ICBC Leasing to tap US Ex-Im financing this year

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ICBC Leasing is expected to diversify its financing requirements this year as the Chinese lessor will grow its portfolio by 30%.

ICBC Leasing currently has a 63-aircraft portfolio but plans are to end the year 2011 with 100 aircraft.

Talking to CAO, managing director global head of aviation finance Johnny Lau says the lessor will finance its planned growth through 'different options', among them the Export-Import Bank of the United States (Ex-Im Bank) supported financing.

The Ex-Im Bank and ICBC leasing signed a memorandum of understanding (MOU) last December in a move that signalled the return of Ex-Im Bank financing to the Chinese air finance market. Between 1992 and 2001, Ex-Im Bank supported more than $6 billion in aircraft financing to 15 different airlines in the Peoples Republic of China, enabling them to purchase more than 150 commercial aircraft, but no aircraft have been financed by Ex-Im Bank since.

Lau says the agreement is still an MOU but ICBC Leasing is confident to tap Ex-Im Bank financing during the first half of this year.

ICBC Leasing is also expected to finance some acquisitions using the Ex-Im Bank of China facility that was signed last year. Last December, the lessor signed a 10 billion yuan ($1.5 billion) or foreign-currency equivalent agreement with the Ex-Im Bank of China to finance its aircraft, vessels and equipments as well as overseas leasing assets.

"We used the Ex-Im Bank of China facility last year for five Air China acquisitions and we will tap it more this year, both for domestic and international applications," says Lau.

Lau adds that ICBC Leasing will also source debt from ICBC domestic and overseas branches to finance new deliveries and acquisitions this year. The lessor has also tapped the commercial banking market for a first batch of aircraft. "We mandated BNP Paribas to arrange debt on a first batch of aircraft to be delivered in 2011," he says. CAO also understands that the French bank is also acting as a financial advisor.

A first batch of aircraft includes 14 deliveries starting this month and spreading through December, according to Lau. Among them six new Airbus A320s are to be leased to China Southern Airlines for a 12-year period. The Chinese lessor also acquired two Air Berlin 737-800 slot positions and placed them to Shenzhen Airlines for a 10-year operating lease term.