AerCap priced an offering of $500 million fixed-rate reset junior subordinated notes due 2056. The notes will be issued with an initial interest rate of 6.500% per annum. The interest rate will be reset on January 31, 2031, and every five years after that, based on the then-prevailing five-year US Treasury rate plus a spread of 2.441%.
The net proceeds will be used for general corporate purposes, which may include the redemption of all or a portion of AerCap Global Aviation Trust's outstanding fixed-to-floating rate junior subordinated notes due 2045 on June 16, 2025, which is the redemption date for the notes.
The joint bookrunners for the offering were Mizuho, BofA Securities, MUFG, and Truist Securities.
Fitch Ratings had recently upgraded AerCap, on March 13, to BBB+ with a stable outlook, citing the company's “scale, franchise strength, and resilience” in aircraft leasing. In addition, the company's “solid asset quality, diverse funding sources, and strong management” had also supported the upgrade.
“The company's leverage is appropriate, liquidity is solid, and it maintains a predominantly unsecured funding profile,” Fitch read in its report. The rating agency highlighted key risks, including its leverage above 2.7x, liquidity coverage below 1.2x, as well as the supply chain disruptions and geopolitical risks impacting the aviation sector overall. “AerCap is well-positioned to navigate these due to its robust risk management and diverse portfolio,” Fitch added.
As of December 31, 2024, AerCap's total debt was reduced to $45.3bn, compared to $46.5bn a year prior. Adjusted net debt to equity ratio was 2.35x, down from 2.47x at the end of 2023.
“Despite our current indebtedness levels, we may increase our levels of debt in the future to finance our operations, include to purchase aircraft, engines or helicopters or to meet our contractual obligations,” AerCap read in its 20-F filing on February 26, 2025.
The company was also issued a BBB+ and Baa1 rating from S&P and Moody's, respectively, both with a stable outlook and both issued in June last year.
The offering follows yesterday's bond pricing from Avolon and Macquarie AirFinance.