UK Banks arrange first Islamic-Structured Helicopter Financing Deal
Article Overview
The Bank of London and the Middle East (BLME), a Sharia compliant bank based in London along with Lloyds Bank have arranged the World’s First Islamic-Structured PDP Helicopter Financing deal.
BLME acting as the original Islamic facility participant, under a master Murabaha facility agreement, with Lloyds Bank as the original lender under a conventional facility agreement and mandated lead arranger, security agent and intercreditor agent for both facilities have concluded a world first Islamic financial transaction.
The deal allows LCI, the aviation leasing arm of the Libra Group to complete the world’s first secured helicopter PDP (“Pre-Delivery Payment”) funding under a unique Islamic finance structure. The innovative multi-year financing arrangement by LCI’s helicopter leasing division, LCI Helicopters, initially covers over US$250 million worth of Airbus Helicopters assets.
The arrangement covers the H175 – Airbus Helicopters’ new-generation medium-sized rotorcraft. This 7-ton class helicopter is certified in accordance with the latest and most demanding regulatory requirements.
UK Innovation in Islamic Finance
UK Islamic Finance has displayed a double first this week, as in addition to the innovative LCI deal, earlier this week saw delivery of the fourth and final Airbus A380 aircraft to be funded under the world’s first corporate sukuk to be guaranteed by a western government. The aircraft was delivered to Emirates at Hamburg Airport with the sukuk guaranteed by UKEF.
The $913 million sukuk issuance marks a triple first, as well as being the first example of a sukuk sold in the debt capital markets to be backed by an export credit agency, it is also the first time a sukuk has been used to pre-fund the sale of aircraft, and the largest capital markets offering of any kind for aviation to carry an ECA guarantee.
The case has been hailed as a new gold standard for sharia-compliant asset finance. It has widened options for buyers of UK exports and boosted the UK’s aspiration to become the leading Western hub for Islamic finance.
