AWARDS: Structured Financing

Jan 15, 2016

This issuer became the first South American airline to employ a complex financing tool, overcoming untested legal ground in multiple jurisdictions to significantly upsize this landmark transaction

With $10 billion of expected capital expenditures in the next several years, Latam Airlines is always on the hunt for new financing options. The Santiago-based company executed the first enhanced equipment trust certificate (EETC) for a South American airline and the largest of its kind outside the US. The $1.02 billion transaction executed broadened Latam Airlines’ investor pool and set industry precedents under untested legislation in a complex, challenging and ultimately fruitful transaction that the borrower is considering repeating.

EETCs are corporate debt securities that are commonly used in aircraft finance and have typically only been used by US issuers, as the instruments had been tied to US bankruptcy code that only gave protection to creditors of US carriers. However, the Cape Town treaty created in 2001, made EETCs a possibility...

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