BOC Aviation taps cash-rich Japan banks for $422 mln loan

SINGAPORE (REUTERS) - Singapore-based BOC Aviation Pte Ltd has finalised a US$300 million (S$422 million) syndicated loan with 18 Japanese banks in an opportunistic move ahead of an expected rise in U.S. interest rates, the CEO of Asia's No. 2 aircraft lessor said.

The unsecured financing was closed with the Japanese banks, led by Development Bank of Japan, Robert Martin told Reuters in an interview on Monday after the lessor reported a 5 per cent rise in net profit after tax to a record US$171 million.

Thirteen of the participating banks were new to BOC Aviation, highlighting interest by Japanese lenders to increase exposure to overseas assets.

BOC Aviation is a fully-owned leasing unit of Bank of China, which competes with the likes of GECAS, part of General Electric, and ILFC, part of AerCap.

"The Japanese banks are very flush with money at the moment, so it's a good time to engage them," said Mr Martin.

BOC Aviation, formed after Bank of China acquired the Singapore Airlines-backed firm in 2006, has grown to become the world's fifth largest lessor, with a portfolio of 256 aircraft operated by 61 airlines including Southwest Airlines and Emirates Airline.

With cost of planes and their financing making up 80 percent of total costs of the lessor, BOC Aviation is looking to secure funding for its 195 aircraft on order, which have deliveries stretching through to early next decade.

Investors, governments and central banks around the world are bracing for a rise in U.S. rates, which could come as early as September.

BOC Aviation has raised a total of US$1.8 billion in new financing this year and has attracted new banks such as Wells Fargo to its group of over 50 lenders.