Brand new trains being pushed off-lease: implications and options for financiers

The cost of purchasing and leasing new trains has fallen dramatically over the last three years, due to factors including lower manufacturer prices and the availability of cheap, long-term financing. A number of train operators are taking advantage of this attractive combination. One side-effect has been that the leases of some relatively young fleets have been allowed to expire as a new fleet may be materially cheaper to lease. Extraordinarily, in March 2017 it was announced that a fleet ordered in September 2014 – and which is so new that it is still being built – will be pushed off-lease in around 2019. Graeme McLellan, Head partner of the rail team, examines this trend, featured in Butterworths Journal of International Banking and Financial Law.