American based International Lease Finance Corp (ILFC) has mandated JP Morgan as bookrunner and co-ordinator along with a group of Asian banks to arrange a $500 million three year fundraising. The mandated arranger group also includes Bank of China (Hong Kong), DBS, Industrial & Commercial Bank of China (Asia), Agricultural Bank of China and Overseas Chinese Banking Corp.
Banks wishing to join the deal will earn a margin of 87.5bp over Libor and receive fees on one of three levels. Lead arrangers absorbing $35 million or more gain 42.5bp, arrangers taking $20 million to $34 million receive 37.5bp and lead managers are paid 30bp for tickets between $10 million and $19 million.
The all-in of 101.6bp is substantially higher than the 33bp offered on its previous facility - a $2.15bn 364 day revolver completed in October last year. This deal was syndicated in the US markets with Citigroup and Banc of America Securities acting as arrangers.
Officials say the borrower is offering a higher spread on this facility to ensure a successful syndication. Investors in the region have had little chance to hear about the borrower's credit story as this is its first venture into the Asian loan market.
Alan Lund, ILFC's CFO, comments that, "This maiden loan facility in Asia Pacific marks an important milestone for ILFC in the diversification of its funding sources from the traditional US and European markets."
Bankers around the region are smacking their lips at the prospect of booking an A1 rated credit at this level. Most of the Hong Kong bankers have been living on thinly priced Hong Kong dollar deals and will be desperate to take advantage of this transaction and get the asset on their books.
Current deals claiming the attention of bankers include the potential fundraising for China Unicom which could be even larger than this deal at $1 billion. Others include the HK$2 billion ($256 million) transaction for Swire that is priced at just 39.5bp at the top tier.
Loan syndicators feel it is unlikely these deals will attract funds away from this financing. Some go as far as to say that the large banks may well be considering signing up to two, if not all three, of these transactions.
Market observers expect the deal for to be a huge success given the response to the HK$3.8 billion ($487 million) Hutchison Whampoa deal. This facility was oversubscribed, with nine banks joining the six arrangers, even though the deal pays just 49.25bp at the top level.
In addition to the loan being the first by the borrower in Asia, it is also the first facility for this type of borrower in the region. Analysts believe this can only add to the attraction of the deal as it allows bankers to book quality assets that are not property related - as is often the only credit available in Hong Kong.
The mandated arrangers are committing on a take and hold basis and have already agreed to commit the entire $500 million between them. Any tickets received from institutions joining in general syndication will result in the facility size being increased.
Market sources are confident the financing will be concluded without a problem given both the attractive pricing and the scarcity value of the credit. Furthermore the competition for funds is limited and many of the banks interested in joining this deal are flush with liquidity.
The borrower is an indirectly-held, wholly owned subsidiary of American International Group (AIG). It is involved in the leasing and remarketing of advanced technology commercial jet aircraft to airlines around the world. Proceeds are for general corporate funding.
