HSBC has completed three aircraft financings for Air Astana.

All in, the bank has lent US$120mn to the Kazakh airline for the purchase of three Airbus A320 passenger jets, with payment for each plane signed the week before delivery.

Given the fact that Airbus’ parentage is French, German and British, the respective ECAs of each country were involved in the financing.

However, Germany’s Euler Hermes was the lead agency, negotiating coverage directly with HSBC and Air Astana. UKEF and Coface worked with Hermes in providing reinsurance solutions.

The loan facility was mandated in March, with first delivery in May. Second delivery came in September, with the final jet being delivered in November.
Philip Lewis, director of structured asset finance at HSBC who led the deal, tells GTR that the ECA arrangement removed layers of complexity from the transaction, which was “largely streamlined”.

Reflecting on 2013, Lewis said it was a good year for the bank in the aircraft finance space, but that the year was largely defined by the return of certain banks to the sector.

In a practice that now appears to be percolating throughout the trade, commodity and asset finance sectors, the French banks – namely the big four of BNP Paribas, Crédit Agricole, Société Générale and Natixis – re-entered the market by securitising their aircraft finance transactions.

In a clear move to shift leverage from their balance sheets ahead of Basel III legislation, French banks have been bundling transactions into saleable assets.

Earlier in 2013, BNP Paribas made headlines for doing so with commodities deals, via its Lighthouse platform. At the time, Gabriel Vaduva, the bank’s deputy head of energy and commodity distribution solutions, told GTR that the move represented a “rearranging of the tectonic plates of commodities trading” and that banks that wish to survive in the post-2008 banking landscape have to be creative in how they service their clients.

The last week has also seen serious commitment to the purchase of aircraft from Middle Eastern buyers.

At November’s Dubai Air Show, Emirates placed the largest aircraft order in civil aviation history – ordering US$99bn worth of planes from Boeing and Airbus. Included in the order were 150 of Boeing’s new 777 mini-jumbo jet (worth US$76bn) and 50 Airbus A380s – the world’s largest passenger plane – priced at US$23bn.

Qatar airline Etihad also splashed out at the show, agreeing to spend US$19bn on a fleet of Airbus planes as part of its modernisation strategy.

Lewis says the obvious liquidity in the market has helped drive prices down, enabling HSBC “to make quite a few deliveries”.