Citigroup has closed financing for a financial leasing agreement signed between VEB-leasing, one of the top three financial lessors in Russia, and Aeroflot, Russia’s largest airline company, to finance three A321-200 aircraft. Citi acted as a sole mandated lead arranger and advisor, joint lender and facility agent. The arrangement is expected to facilitate Aeroflot’s plans for fleet renewal and expansion of its domestic and international routes. The total catalog price for the three Airbus aircraft is US$310.8m.
The 10-year financing was guaranteed by three European export credit agencies (ECAs): Euler Hermes (Germany), Coface (France) and ECGD (UK). This transaction is VEB-leasing’s first ECA-backed financing. In its advisory capacity, Citi assisted VEB-leasing throughout the ECA process and helped them obtain optimal ECA rating. The support of the ECAs allowed VEB-leasing to close the deal on favourable conditions and offer competitive financing terms to Aeroflot.
The Royal Bank of Scotland (RBS) acted as a joint lender for the delivery of the first two aircraft, delivered in February-March 2012. VEB-leasing provided 15% down payment financing. The third delivery will take place in August 2012.
Alex Taylor, Citi’s head of export and agency finance in Europe, Middle East and Africa (EMEA), said: “We are pleased to have been mandated by VEB-leasing for this landmark transaction. The closing of this deal in spite of challenging market conditions highlights Citi’s ability to leverage its global export and agency finance network and facilitate the support of long-term credit guarantors to optimise funding structures for our clients.”
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