AirAsia’s structured deal is another instance of the growing popularity of private credit in Asia that is fast becoming a serious rival to mainstream lending by offering higher, floating rates of return.
The financing, structured as privately-placed bonds linked to revenue, is secured by the sale of future airline tickets from AirAsia’s key routes, the people said.
Evercore is AirAsia’s financial adviser, while A&O Shearman is its international counsel. Milbank LLP is representing the lenders.
Ares declined to comment. A&O Shearman, Evercore, Indies and Milbank did not immediately respond to requests for comment. AirAsia confirmed the deal is taking place.
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The private credit tranche of AirAsia’s latest securitised deal pays a coupon of 11% per annum and has a four-year tenor, the people said. The lessor piece offers 7% per year and carries a two-year maturity. The deal has been signed but not yet funded.
The terms of the transaction have changed from the initial stage, which circulated in the second half of last year, following negotiations, according to the people.
AirAsia is no stranger to the private credit space. The carrier’s engineering and maintenance affiliate Asia Digital Engineering in April 2023 had raised US$100 million from investment firm OCP Asia, according to a statement at the time.
The budget airline is also looking to expand its medium to long-haul network to Europe and West Coast North America, underpinning its ambition to expand globally throughout the decade.
