Deal analysis: Embraer closes $1bn loan
Embraer has seen very strong demand for its latest standby credit facility and demonstrated how banks are returning to the market with 25 institutions lending to the aircraft manufacturer.
Embraer has seen very strong demand for its latest standby credit facility and demonstrated how banks are returning to the market with 25 institutions lending to the aircraft manufacturer.
The two year loan splits into two parts: $ 400 million for pre-export financing which can be used for both business jets and commercial aircraft; and $600 million for working capital. It replaces a $500 million facility that the manufacturer closed in August 2006.
Embraer was originally looking to borrow $750 million but bank appetite to lend meant it was more than twice oversubscribed with $1.6 billion being offered. BNP Paribas led the deal.
The closing of this operation demonstrates Embraer’s high degree of credibility, because this is a credit line of $ 1 billion that is available for withdrawals under pre-agreed conditions,” said Luiz Carlos Aguiar, CFO of Embraer. “The agreement also contributes to improving our credit risk classification in the near future.”
The pre-export finaning tranche priced at Libor plus 1.65% with the $600 million portion at Libor plus 1.85%.
BNP Paribas, Banco do Brasil, HSBC, Intesa Sanpaolo, Santander, Societé Générale, and Bank of Tokyo-Mitsubishi were bookrunners.
Banco de Chile, Banco Espírito Santo, Bank of America, BBVA – Banco Bilbao Vizcaya Argentaria, Bradesco, Chang Hwa Commercial Bank, Citibank, Credit Agricole, Credit Industriel et Commercial, Hua Nan Commercial Bank, ING, Itaú BBA, JPMorgan Chase, Mizuho Corporate Bank, Natixis, Sumitomo Mitsui Banking Corporation, The Bank of Taiwan, and The Royal Bank of Scotland also participated.
The loan replaces a $500 million facility that the manufacturer closed in August 2006.
