Commission Delegated Regulation (EU) 2018/179Show full title

PART 2 NEW AIRCRAFT

CHAPTER I Coverage

8. NEW AIRCRAFT

(a)

For the purpose of this Sector Understanding, a new aircraft is:

(1)

An aircraft, including buyer furnished equipment, and the engines installed on such aircraft owned by the manufacturer and not delivered nor previously used for its intended purpose of carrying passengers and/or freight and

(2)

Spare engines and spare parts when contemplated as part of the original aircraft order in accordance with the provisions of Article 20(a) below.

(b)

Notwithstanding the provisions of paragraph (a) above, a Participant may support terms appropriate to new aircraft for transactions where, with the prior knowledge of that Participant, interim financing arrangements had been put in place because the provision of official support had been delayed; such delay shall not be longer than 18 months. In such cases, the repayment term and the final repayment date shall be the same as if the sale or lease of the aircraft would have been officially supported from the date the aircraft was originally delivered.

CHAPTER II Financial terms and conditions

Financial terms and conditions for export credits encompass all the provisions set out in this Chapter, which shall be read in conjunction one with the other.

9. ELIGIBLE CURRENCIES

The currencies which are eligible for official financing support are euro, Japanese yen, UK pound sterling, US dollar, and other fully convertible currencies for which data are available to construct the minimum interest rates mentioned in Appendix III.

10. DOWN PAYMENT AND MAXIMUM OFFICIAL SUPPORT

(a)

For transactions with buyers/borrowers classified in Risk Category 1 (as per Table 1 of Appendix II), the Participants shall:

(1)

Require a minimum down payment of 20 % of the net price of the aircraft at or before the starting point of credit;

(2)

Not provide official support in excess of 80 % of the net price of the aircraft.

(b)

For transactions with buyers/borrowers classified in Risk Categories 2 to 8 (as per Table 1 of Appendix II), the Participants shall:

(1)

Require a minimum down payment of 15 % of the net price of the aircraft at or before the starting point of credit;

(2)

Not provide official support in excess of 85 % of the net price of the aircraft.

(c)

A Participant which applies Article 8(b) above shall reduce the maximum amount of official support by the amount of principal of the instalments deemed due from the starting point of the credit so as to ensure that, at the time of disbursement, the amount outstanding is the same as if such an officially supported export credit was provided at the time of delivery. In such circumstances, prior to delivery the Participant shall have received an application for official support.

11. MINIMUM PREMIUM RATES

(a)

The Participants providing official support shall charge, for the credit amount officially supported, no less than the minimum premium rate set out in accordance with Appendix II.

(b)

The Participants shall use, whenever necessary, the agreed premium rate conversion model to convert between per annum spreads calculated on the outstanding amount of the official support and single up-front premium rates calculated on the original amount of the official support.

12. MAXIMUM REPAYMENT TERM

(a)

The maximum repayment term shall be 12 years for all new aircraft.

(b)

On an exceptional basis, and with a prior notification, a maximum repayment term of up to 15 years shall be allowed. In this case, a surcharge of 35 % to the minimum premium rates calculated in accordance with Appendix II shall apply.

(c)

There shall be no extension of the repayment term by way of sharing of rights in the security on a pari passu basis with commercial lenders for the officially supported export credit.

13. REPAYMENT OF PRINCIPAL AND PAYMENT OF INTEREST

(a)

The Participants shall apply a profile of repayment of principal and payment of interest as specified in subparagraph (1) or (2) below.

(1)

Repayment of principal and payment of interest combined shall be made in equal instalments:

• Instalments shall be made no less frequently than every three months and the first instalment shall be made no later than three months after the starting point of credit.

• Alternatively, and subject to a prior notification, instalments shall be made every six months and the first instalment shall be made no later than six months after the starting point of credit. In this case, a surcharge of 15 % to the minimum premium rates calculated in accordance with Appendix II shall apply.

• In the case of a floating rate transaction, the principal amortising profile shall be set for the entire term, no more than five business days prior to the disbursement date, based on the floating or swap rate at that time.

(2)

Repayment of principal shall be made in equal instalments with interest payable on declining balances:

• Instalments shall be made no less frequently than every three months and the first instalment shall be made no later than three months after the starting point of credit.

• Alternatively, and subject to a prior notification, instalments shall be made every six months and the first instalment shall be made no later than six months after the starting point of credit. In this case, a surcharge of 15 % to the minimum premium rates calculated in accordance with Appendix II shall apply.

(b)

Notwithstanding paragraph (a) above, and subject to a prior notification, the repayment of principal may be structured to include a final payment of all outstanding amounts on a specified date. In such case, repayments of principal prior to the final payment will be structured as set out in paragraph (a) above, based on an amortisation period not greater than the maximum repayment term allowed for the goods and services being supported.

(c)

Notwithstanding paragraph (a) above, repayment of principal may be structured on terms less favourable to the obligor.

(d)

Interest due after the starting point of credit shall not be capitalised.

14. MINIMUM INTEREST RATES

(a)

The Participants providing official financing support shall apply either a minimum floating interest rate or a minimum fixed interest rate, in accordance with the provisions of Appendix III.

(b)

For jet aircraft of a net price of at least USD 35 million, official financing support on CIRR basis shall only be provided in exceptional circumstances. A Participant intending to provide such support shall notify all other Participants at least 20 calendar days before final commitment, identifying the borrower.

(c)

Interest rate excludes any payment by way of premium referred to in Article 11 above, and fees referred to in Article 16 below.

15. INTEREST RATE SUPPORT

The Participants providing interest rate support shall comply with the financial terms and conditions of this Sector Understanding and shall require any bank or any other financial institution which is a party to the interest supported transaction to participate in that transaction only on terms that are consistent in all respects with the financial terms and conditions of this Sector Understanding.

16. FEES

(a)

Subject to the limits of the premium holding period, the Participants providing official support in the form of pure cover shall charge a premium holding fee on the un-drawn portion of the official support during the premium holding period, as follows:

(1)

For the first six months of the holding period: zero basis points per annum.

(2)

For the second six months of the holding period: 12,5 basis points per annum.

(3)

For the third and final six months of the holding period: 25 basis points per annum.

(b)

The Participants providing official support in the form of direct credit/financing shall charge the following fees:

(1)

Arrangement/Structuring fee: 25 basis points on the disbursed amount payable at the time of each disbursement.

(2)

Commitment and premium holding fee: 20 basis points per annum on the un-drawn portion of the officially supported export credit to be disbursed, during the premium holding period, payable in arrears.

(3)

Administration fee: five basis points per annum on the amount of official support outstanding payable in arrears. Alternatively, the Participants may elect to have this fee payable as an up-front fee, on the amount disbursed, at the time of each disbursement pursuant to the provisions of Article 11(b) above.

17. CO-FINANCING

Notwithstanding Articles 14 and 16 above, in a co-financing where official support is provided by way of direct credit and pure cover, and where pure cover represents at least 35 % of the officially supported amount, the Participant providing direct credit shall apply the same financial terms and conditions, including fees, as those provided by the financial institution under pure cover, to generate an all-in cost equivalence between the pure cover provider and the direct lender. In such circumstances, the Participant providing such support shall report the financial terms and conditions supported, including fees, in accordance with the reporting form set out in Appendix IV.