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Manila Bulletin devider Business devider The Stock Market devider MUFG secures $123-M Japanese operating lease for Cebu Pacific

MUFG secures $123-M Japanese operating lease for Cebu Pacific

Published Oct 4, 2023 11:19 am

Gokongwei-owned Cebu Pacific, through its finance partner MUFG Bank Ltd., has signed a 12-year Japanese Operating Lease with Call Option (JOLCO) worth $123 million.

This is the first time the local airline has “returned to the financing market via a JOLCO structure since the pandemic,” according to MUFG in a statement on Wednesday, Oct. 4.

Through this, low-cost airline Cebu Pacific was able to get two Airbus A321NX new-generation aircraft to add to their existing fleet in order to secure the transaction.  

The bank served as the airline’s mandated lead arranger who sourced and arranged both debt and equity portions in the JOLCO transaction, as well as the account bank, facility agent and security agent, and main lender in the financing process.

MUFG Managing Director and Head of Aviation Finance for Asia Pacific June Raj said the bank’s Global Aviation Finance Office (GAFO) seeks to reach out and diversify its aviation portfolio and coverage of aviation clients.

“The JOLCO market continues to be an attractive financing option for selected clients across the region. This latest JOLCO transaction once again demonstrates MUFG’s commitment and specialized capabilities in supporting our aviation clients through the ebb and flow of market cycles. Cebu Pacific is an important client for MUFG and we look forward to further collaboration with them as they continue to grow from strength to strength,” said Raj.

Meanwhile, MUFG Managing Director and Head of Global Corporate & Investment Banking for Philippines Diana Singson said the company is working towards deepening its partnership with the airline and its parent company JG Summit Holdings Inc. through the JOLCO financing.

“Having been in the Philippines for close to 70 years, this transaction showcases MUFG’s capabilities and deep understanding of our Philippine-based clients and support them as they expand in the region,” Singson added.

According to the JP Lease Products & Services Co. Ltd., a JOLCO is an “operating lease which gives the lessee an option to purchase the asset at the end of the lease, or at some point during the lease period, at the purchase price determined at the commencement of the lease.”

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