International AirFinance Corporation (IAFC) has picked two banks to arrange a $400 million Islamic loan to finance the provision of five aircraft, one of the arrangers of the facility said on Sunday.
National Bank of Abu Dhabi and Arab Banking Corporation have been mandated as lead arrangers for the loan, which they have also underwritten, a statement from the former said.
The loan with a lifespan of eight years will be used to fund the purchase of A330-200 aircraft which will be leased by Kuwait Airways, the statement said. A period to market the murabaha-structured loan to other banks is expected to close at the end of May, it showed.
A murabaha is a cost-plus-profit arrangement which is one of the most popular formats for structuring Islamic loans. IAFC is the first Shariah-compliant aircraft leasing fund dedicated to Airbus aircraft and is seed funded by Airbus and Islamic Development Bank. This is their first syndicated loan.
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