Budget carrier AirAsia Bhd has successfully secured $443 million in private credit financing to refurbish aircraft grounded during the pandemic and refinance lease liabilities. The deal, structured in two tranches, includes $200 million from private credit funds Ares Management Corp. and Indies Capital Partners Pte. Ltd. specifically for aircraft refurbishment. The remaining $243 million, provided by aircraft lessors, is allocated for lease liability refinancing.Budget carrier AirAsia Bhd has successfully secured $443 million in private credit financing to refurbish aircraft grounded during the pandemic and refinance lease liabilities. The deal, structured in two tranches, includes $200 million from private credit funds Ares Management Corp. and Indies Capital Partners Pte. Ltd. specifically for aircraft refurbishment. The remaining $243 million, provided by aircraft lessors, is allocated for lease liability refinancing.
The financing, arranged as privately-placed bonds linked to future airline ticket sales from key routes, highlights the rising prominence of private credit in Asia. This sector is increasingly challenging traditional lending by offering higher, floating returns.
The deal involves a private credit tranche with an 11% annual coupon and a four-year term, while the lease refinancing tranche carries a 7% annual rate with a two-year maturity. The transaction has been finalized but not yet funded.
AirAsia’s financial advisor for this deal is Evercore Inc., with A&O Shearman serving as international counsel and Milbank LLP representing the lenders. AirAsia confirmed the deal, though Ares Management, A&O Shearman, Evercore, Indies Capital Partners, and Milbank LLP did not immediately respond to requests for comment.
In April 2023, AirAsia’s engineering affiliate, Asia Digital Engineering Sdn. Bhd., raised $100 million from OCP Asia Ltd. The airline is also planning to expand its medium- to long-haul network into Europe and the West Coast of North America, reflecting its broader global ambitions for the decade.
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