Piiq Risk Partners has completed its first insurance-backed aviation finance transaction, alongside Credit Agricole CIB (CA-CIB): the refinancing of an Airbus A350-900 held under a Japanese operating lease with call option (Jolco) structure.
“This new transaction was a market first refinancing of a Japanese Operating Lease with a Call Option (JOLCO) on a 2020 vintage Airbus A350-900 aircraft operated by Scandinavian Airlines System (SAS),” said Piiq, which undertook the transaction via its IFLI division.
CA-CIB acted as overall Jolco equity and debt arranger. The insurers were SOMPO Japan Insurance and Aioi Nissay Dowa Insurance, with international reinsurance support from Axis Insurance and Fidelis Insurance.
IFLI (Integrated Finance Linked Insurance) is designed to originate, structure and manage aircraft finance transactions using commercial insurance. The IFLI product allows banks and capital market investors the protection of an insurance-backed aviation finance product when financing new aircraft or refinancing aircraft already owned by airlines or lessors.
Piiq's offering includes in-house expertise in underwriting, deal origination, legal due diligence and transaction structuring, and market analytics.
The transaction marks Piiq’s first IFLI-supported financing.
“This further development of the insurance backed JOLCO market enables Japanese financial institutions to access IFLI through Japanese insurers, and customers to simultaneously access the Japanese equity market and the credit insurance markets,” said Piiq.
“IFLI was conceived as a way of expanding the insurance market capacity through structures, diversity of aircraft types, aircraft vintage and manufacturers. In closing this transaction, we have proven that by having a close partnership with insurers and in structuring a transaction well, a deal can be done even in this period of uncertainty. We are delighted to have achieved this excellent result in partnership with SAS and CA-CIB,” said Piiq's IFLI senior partner and head of underwriting, Mark Esdaile.
José Abramovici, global head of asset finance group of CA-CIB, commented: “SAS, Japanese equities, IFLI, the insurers and CA-CIB cooperated extensively to cross the finish line and close this landmark transaction. CA-CIB is also delighted to bring this new product to the JOLCO market.”
CA-CIB initially financed the delivery in March 2020 through a JOLCO structure with the French bank acting as global arranger, lender and facility agent.