Abu Dhabi, UAESunday 5 April 2020

DAE raises $300 million loan from Chinese banks

Dubai lessor secures loan from China Construction Bank and China Construction Bank (Asia)

Moody's changed its outlook of plane lessor Dubai Aerospace Enterprise to stable from 'rating under review'. Courtesy of DAE
Moody's changed its outlook of plane lessor Dubai Aerospace Enterprise to stable from 'rating under review'. Courtesy of DAE

Dubai Aerospace Enterprise (DAE), the Middle East's biggest plane lessor, secured a $300 million (Dh1.1 billion) loan from two Chinese banks with the option to increase the principal loan amount to $500m.

The state-owned company signed an agreement for a four-year unsecured term loan with China Construction Bank (DIFC Branch) and China Construction Bank (CCB Asia), it said in a statement. The loan will support the "future financing needs of the business," DAE said without elaborating.

"We are delighted to start the new year 2020 with a meaningful and sizeable transaction with the DIFC branch of one of the world’s leading banking organisations," Firoz Tarapore, chief executive of DAE, said. "We look forward to deepening our relationship with CCB in the future.”

Last year, DAE delivered and committed to deliver more than $1.75 billion in aircraft assets. It increased its managed and committed to manage assets portfolio to more than 125 aircraft valued at $3.5bn. The lessor also issued $1.9bn of new unsecured debt.

“This syndication is the first financing which CCB Group arranged for DAE," said Yuan Shengrui, senior executive officer at China Construction Bank (DIFC Branch). "It demonstrates that DAE is a well-established borrower, which commands significant interest in both Asia and Middle East banking market."

Last year, DAE's owned, managed and committed to own and manage jets in its fleet reached 410 aircraft. It serviced 112 airline customers across 56 countries. In 2019, DAE purchased 13 aircraft assets, sold 41 plane assets and completed 35 lease transactions.

DAE's third quarter profit fell to $63.4m from $95.2m in the same quarter a year earlier, as revenue slipped to $343.5m, from $357.8m in the prior-year period.

The state-owned lessor posted a 10 per cent drop in nine-month profit as depreciation expenses and finance costs grew.

DAE earned $260.5m in the nine months ending September 30, down from $290.5m in the same period a year ago.

Nine-month revenue edged up 1.2 per cent to $1.7bn year-on-year, but depreciation costs increased by $11.8m and net finance costs were $35m higher at $280.5m.

Updated: January 20, 2020 09:01 PM

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