Singapore Airlines closes Airbus A350 financing
Deal features Balthazar insurance cover plus Korean mezzanine debt
12 May 2021 | Michael Marray

KfW IPEX Bank and EastMerchant have closed the sale and leaseback of one Airbus A350-900 aircraft between Singapore Airlines and Crianza Aviation, the Korean aircraft lessor. The transaction features a multi-layered financing structure, with a Balthazar-covered senior loan arranged and provided by KfW IPEX-Bank, which is complemented by Korean mezzanine debt as well as equity from Korean investors together with Crianza.

“Even though the aviation industry is currently heavily restricted due to the spread of Covid-19, we are anticipating demand to rise again after the pandemic has subsided,” says Andreas Ufer, member of the KfW IPEX Bank management board. “The A350 is a fuel-efficient, environmentally friendly aircraft of the Airbus family, representing state-of-the-art technology and is expected to be one of the widebody aircraft shaping the future of air travel.”

Frankfurt-based KfW IPEX Bank focuses on international project and export financing. EastMerchant is a specialist arranger for asset-based finance, and has offices in Dusseldorf, Leipzig and London.  

Balthazar is a non-payment insurance product launched in 2019 to support financing for Airbus aircraft. Insurance company Marsh launched the platform as exclusive broker, with a consortium of insurers made up of Sompo International, Allianz, Fidelis, and AXIS Capital.
 

The product line is similar to the Aircraft Finance Insurance Consortium (AFIC) which was a developed by Marsh in cooperation with Boeing. AFIC’s aircraft non-payment insurance fully protects banks or institutional investors from payment default by an airline, leasing company, or other buyer that is purchasing an aircraft from Boeing. It functions in a similar way to an export credit agency guarantee, but with no non-commercial constraints on pricing or deal structure.

A January deal involving four Brazilian-made Embraer jets being delivered to SkyWest featured cover from AXIS Insurance and Sompo International, part of the Japanese Sompo Group. The lender on the transaction was Brazilian development bank BNDES.