Milbank LLP has advised CDB Aviation, an Irish subsidiary of China Development Bank Financial Leasing Co., Ltd., on its inaugural sustainability linked loan (SLL) facility.
This $625 million facility marks the first major SLL syndicated facility among aircraft lessors and is one of a growing number of financings in the aviation sector which have sustainability linked elements, where typically the margin will increase and/or decrease based on the ability of the borrower group to demonstrate that it has met certain sustainability performance targets, based on pre-determined key performance indicators.
The SLL parameters of this innovative facility were contingent on the satisfaction of Sustainability Performance Targets, based on three KPIs, including two strong environmental and one social related to:
- reducing the carbon intensity of the CDB Aviation’s fleet, focusing on the most fuel-efficient aircraft;
- increasing the share of new generation aircraft in the lessor’s fleet, pursuing its target to reach 60% of new generation aircraft (by number of aircraft) by the end of 2025; and
- increasing the level of Diversity, Equity, and Inclusion-related training for the workforce.
Crédit Agricole Corporate and Investment Bank acted as Sole Sustainability Agent, as well as Lead Sustainability Structuring Advisor jointly with BNP Paribas and the Hong Kong and Shanghai Banking Corporation. Natixis acted as Sustainability Structuring Bank. Crédit Agricole Corporate and Investment Bank acted as Agent of the facility.
The cross-border Milbank team was led by London Transportation and Space partner Nick Swinburne who was assisted by Singapore-based senior associate David Paterson.
