Lion Air in first asset-backed bond issuance

Indonesian LCC Lion Air has completed its first asset-backed bond issuance, the proceeds of which are being used to finance four new Boeing 737-900 ER aircraft worth over US$250 million at catalogue prices.

20th Apr 2012


Indonesian LCC Lion Air has completed its first asset-backed bond issuance, the proceeds of which are being used to finance four new Boeing 737-900 ER aircraft worth over US$250 million at catalogue prices.

The fixed-rate global note, which is guaranteed by the US Ex-Im Bank, is the first asset-backed bond to be completed by an airline in South Asia and is only the second issuance by an Asian airline to be guaranteed by the US Ex-Im Bank. Law firm Stephenson Harwood advised Lion Air on the deal.

The global note, issued on April 19, was over-subscribed and achieved one of the lowest coupon rates seen in export credit agency-backed capital markets financings to date, says Stephenson Harwood. The global note was arranged by BNP Paribas.

"With the increased scarcity in bank liquidity, airlines are looking more and more to the capital markets for the financing of their new orders.  PT Lion's oversubscribed bond issuance at the competitive coupon rate that it achieved is further evidence that investors in this sector are looking for good assets in the East where markets continue to grow and expand," says Paul Ng, Stephenson Harwood’s Singapore-based global head of aviation.

Stephenson Harwood were lead counsel to Lion Air. Milbank acted as special capital markets counsel to Lion Air. Clifford Chance US LLP acted for BNP Paribas, while Zuckert, Scoutt & Rasenberger acted as lead counsel to US Ex-Im Bank, with Vedder Price PC as special capital markets counsel to US Ex-Im Bank.


 

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