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Developments in Asset Finance - International Law Office

International Law Office

Asset Finance - India

Developments in Asset Finance

May 16 2001

Aircraft Financing
Foreign Currency Loan
Securitization of Assets

Aircraft Financing

India's soon-to-be privatized national (and mainly domestic) airline, Indian Airlines, has demanded a $1.5 million penalty fine from GIA Limited, a US-based international leasing company, for failing to deliver five Boeing 737 aircrafts on time.

Indian Airlines is floating fresh tenders for the dry leasing of aircraft for its subsidiary, Alliance Air. The details will be finalized after negotiations with GIA as to new delivery dates for the aircrafts.

Indian Airlines is expanding its fleet and has given the government an ultimatum, stating that if privatization is delayed beyond May 31 2001 then it must proceed with the acquisition rapidly. If it does not receive government funding, Indian Airlines intends to turn to the debt market.

Meanwhile, Jet Airways, a private Indian airline, is acquiring one new Boeing 737 each quarter through a special purpose company.

Foreign Currency Loan

Reliance Petroleum Limited has concluded a syndicated foreign currency term loan of $750 million. The proceeds will be used mainly for capital expenditure. Reliance has set up a refinery to process crude and other petroleum products. The deal will be approved by the government and will be underwritten by ABN Ambro, Grindlays, Bank of America, Citibank, HSBC, Stanchart and Toronto Dominion. Analysts state that the deal will have a BB rating.

Securitization of Assets

ICICI, an Indian bank, is planning to securitize its assets as part of a balance-sheet management exercise. The bank is the first institution in India to undertake this excercise. A bill on securitization is likely to be introduced in Parliament soon.

For further information on this topic please contact Ravi Nath at Rajinder Narain & Co by telephone (+91 11 506 5000) or by fax (+91 11 506 3580) or by e-mail (rnc@del2.vsnl.net.in).

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