A transaction on which Gide advised Turkish Airlines has won the Structured Finance Deal of the Year Award

Turkish Airlines – European Export Credit Agency Guaranteed:

A transaction on which Gide advised Turkish Airlines has won the “Structured Finance Deal of the Year Award” at the Bonds and Loans Awards Turkey 2014. These awards recognise excellence in Turkey’s structured finance and capital markets.

This innovative deal successfully combined a Japanese Operating Lease with Call Option (JOLCO) with a European Credit Agencies’ (EECA) guaranteed bank debt (ECA JOLCO) structure. This structure affords tax advantages to the Japanese equity investors and offers credit enhancement to the lenders.

For Turkish Airlines, the arrangement of the cash flow structure in Japanese Yen allows the airline to naturally hedge its currency risk by matching its excess JPY revenues. The combination of the ECA guarantee, equity investment and JPY-denomination provides Turkish Airlines with a low cost of borrowing. The bulk of the payments are made towards the end of the tenor in a JOLCO structure providing Turkish Airlines with a liquidity advantage. This structure also provides a call option on the purchase of the aircraft on the 10th year. Not all airlines are eligible to enter the JOLCO market and this was a 100% LTV financing unlike most of the alternatives in the current aircraft financing market.

Barbara Pansadoro, of Gide’s London office, led the transaction and was assisted by Tatiana Golubko.

This is one of a number of transactions on which Gide has worked with Turkish Airlines. Turkish Airlines is the national flag carrier airline of Turkey and one of the world’s fastest growing airlines flying to more countries and international destinations than any other airline in the world. The airline was recently named “Europe’s Best Airline” at the World Airlines Awards 2014, for the fourth consecutive year.

BNP Paribas acted as lead arranger and lender and Development Bank of Japan as a lender.