After a long hiatus, leading aircraft lessors are heading back to the capital markets to raise funds despite the heighted interest rate environment.
Air Lease Corporation (ALC) was the first back into the US capital markets in January with a $700 million senior unsecured MTN offering. But the start of the second quarter of the year heralded a wave a financing offerings from top tier aircraft leasing companies.
Avolon priced a private offering of $750 million 6.375% senior unsecured notes due 2028 in May.
Proceeds from the notes, which are fully and unconditionally guaranteed by Avolon, will be used for general corporate purposes, "which may include the future repayment of outstanding indebtedness".
Also in May, SMBC Aviation Capital, via subsidiary SMBC Aviation Capital Finance DAC, closed the sale of $650 5.450%, five-year senior unsecured notes due May 2028. The notes, which are fully and unconditionally guaranteed by SMBC Aviation Capital, priced at US Treasuries plus 200 basis points.
Goldman Sachs, Citi, Credit Agricole-CIB, JPMorgan, RBC Capital Markets and SMBC Nikko were joint bookrunners.
This was SMBC Aviation Capital’s first bond issuance since October 2021 and its first bond issuance since the acquisition of Goshawk in December 2022. It is the company’s seventh successful bond offering following its debut capital markets issuance in July 2016 and the lessor said that it "emphasises the importance of the company’s bond programme in the business’s capital structure".
“This bond issuance is the first bond offering by the business since late 2021," said Aisling Kenny, chief financial officer, SMBC Aviation Capital. "The strength and size of the orderbook for this issuance demonstrates the investor appetite for SMBC Aviation Capital and further strengthens our strong financial position. Our ongoing strong shareholder support, our ability to access debt financing from multiple funding avenues and our high-quality portfolio and customer base, continue to be key competitive advantages.”
In April, Aviation Capital Group (ACG) closing of its sale of $600 million 6.250% senior unsecured notes due 2028. Proceeds from the notes, which are recourse only to ACG and are not guaranteed by ACG’s parent company, will be used for general corporate purposes, including repayment of outstanding indebtedness and the purchase of commercial aircraft.
“We are pleased to announce the successful closing of our latest bond issuance. This transaction provided highly efficient funding for our business plan and was well received by our institutional investors,” said Eric Blau, senior vice president and treasurer of ACG.
Macquarie AirFinance also raised funds in the capital markets with a private offering of $500 million 8.375% senior notes due 2028.
The company plans to use the net proceeds to prepay a portion of the outstanding existing debt, consisting predominantly of secured debt.
Michael Sims, chief financial officer of the Macquarie AirFinance group, stated: “We are very pleased with the strong response to our inaugural senior unsecured note offering. This important strategic transaction provides additional diversification in our funding as well as continued momentum as we transition to a predominantly unsecured capital structure.”