Embraer and BNP Paribas have concluded their shared operation
Embraer, the Brazilian aerospace company, has announced the closure of a US$500 million syndicated standby facility with BNP Paribas. This credit arrangement provides Embraer with a flexible financial support system and liquidity backup, acting as a valuable tool for its liability management process.
The facility, comprising a US$250 million trade finance credit facility with a two-year repayment term and a US$250 million revolving credit facility with a drawdown term not exceeding five years from the closing date, is a significant step for Embraer. The syndicated standby facility involves a group of lenders coordinated by BNP Paribas as the lead arranger. Other participating banks include ABN AMRO, Banco Santander Central Hispano, Banco Bilbao Vizcaya Argentaria, Credit Industriel et Commercial, HSBC, JPMorgan Chase, Bank of Tokyo-Mitsubishi, Citibank, Sanpaolo Imi Bank, Banco do Brasil, Banco Latinoamericano de Exportaciones (Bladex), Banco Bradesco, Natexis Banques Populaires, and Sumitomo Mitsui Banking Corporation.
This facility marks the first large transaction for Embraer since the company was awarded an investment-grade rating by both Moody's and S&P. The main objective of negotiating this facility was to enhance Embraer’s liquidity position, support its general corporate purposes, and working capital needs. The standby nature of the facility means it functions as a backup line of credit that Embraer can access if necessary, providing financial stability and flexibility.
According to Antonio Luiz Pizarro Manso, Embraer's executive vice-president and CFO, the syndicated standby facility will represent a hedging instrument to support Embraer's finance strategy. The facility is expected to result in a reduction of Embraer's overall cost of debt, reflecting Embraer’s prudent approach to maintaining strong liquidity amid market uncertainties, especially considering the aerospace sector's capital-intensive operations.
The syndicated standby facility for Embraer does not have a specific repayment or drawdown term beyond the information provided. Additionally, it has not been specified to have a specific objective beyond creating a tool for Embraer's liability management process. BNP Paribas led the syndicate and acted as the sole bookrunner, with Banco do Brasil, Bladex, Bradesco, Natexis Banques Populaires, and Sumitomo Mitsubai Banking Corporation acting as mandated lead arrangers. The facility also includes additional participants beyond those previously mentioned in the BNP Paribas-led syndicate.
- This syndicated standby facility, consisting of US$250 million for trade finance credit and US$250 million for a revolving credit facility, represents a significant move in the transaction banking sector of the finance and banking-and-insurance industry for Embraer.
- The negotiation of this facility aims to boost Embraer's liquidity, support its general corporate purposes, and meet its working capital needs, providing the company with a backup line of credit for financial stability and flexibility in the future.
- With the participation of multiple banks, including BNP Paribas, ABN AMRO, Banco Santander Central Hispano, Banco Bilbao Vizcaya Argentaria, Credit Industriel et Commercial, HSBC, JPMorgan Chase, Bank of Tokyo-Mitsubishi, Citibank, Sanpaolo Imi Bank, Banco do Brasil, Banco Latinoamericano de Exportaciones (Bladex), Banco Bradesco, Natexis Banques Populaires, and Sumitomo Mitsubai Banking Corporation, this facility offers a unique opportunity for the fintech industry to support Embraer's finance strategy.
