International AirFinance Corporation (IAFC) has picked two banks to arrange a $400 million Islamic loan to finance the provision of five aircraft, one of the arrangers of the facility said on Sunday.

National Bank of Abu Dhabi and Arab Banking Corporation have been mandated as lead arrangers for the loan, which they have also underwritten, a statement from the former said.

The loan with a lifespan of eight years will be used to fund the purchase of A330-200 aircraft which will be leased by Kuwait Airways, the statement said.

A period to market the murabaha-structured loan to other banks is expected to close at the end of May, it showed.

“The aviation industry is one of the fastest growing industries in the West-East corridor and one of our five top priority sectors for our wholesale banking activity,” said Vasgen Edwards, global head of Aerospace & Transport at NBAD.

“This unique transaction also highlights our expertise and expanding foothold in the Islamic finance segment. We are extremely proud that in the first quarter of this year, NBAD was ranked as the world’s number one bank for managing issuance of international sukuk.”

Earlier this year NBAD co-structured a $913 million UKEF-backed Sukuk closed by Emirates Airlines, making it the first time that a Sukuk has been used to pre-fund the acquisition of aircraft.

A murabaha is a cost-plus-profit arrangement which is one of the most popular formats for structuring Islamic loans.

IAFC is the first Sharia compliant aircraft leasing fund dedicated to Airbus aircraft and is seed funded by Airbus and Islamic Development Bank. This is their first syndicated loan. – TradeArabia News Service and Reuters