Lessors securing cheaper debt and credit

Although I am mindful of going on about the strength of the markets lately, airlines and aircraft lessors have been taking full advantage of the positive pricing environment to refinance debt and existing credit facilities at significantly lower rates and higher volumes. The latest company to benefit is Air Lease Corp, which announced the closing of a $1.7bn four-year unsecured revolving credit facility priced at LIBOR +1.45%, with no LIBOR floor.
This new facility amends and updates ALC’s existing bank facility, by increasing the size from $1.1 billion to $1.7 billion, extending the availability period from three years to four years to May, 2017, and reducing the pricing from LIBOR +1.75% with no LIBOR floor and an undrawn fee of 37.5 basis points to LIBOR +1.45% with no LIBOR floor and a 30 basis point facility fee.
This revolving credit line was arranged by eight joint bookrunners: J.P. Morgan Securities, BMO Capital Markets, Citigroup Global Markets, Credit Suisse Securities (USA), Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBC Capital Markets, RBS Securities, and Wells Fargo Securities. The number of participating banks increased from 19 to 26 in the facility.
“ALC is pleased to announce the closing of our amended syndicated unsecured revolving credit facility. We are grateful for the continuing support from our banking group as we continue expanding our global business,” said Gregory B. Willis, Senior Vice President and Chief Financial Officer of Air Lease Corporation. “This credit facility further strengthens our balance sheet and increases our access to attractively priced capital.”
Meanwhile, AWAS has re-priced its 2012 term loan with significantly more attractive pricing. The LIBOR margin of the loan reduced from 3.50% to 2.75%, with the LIBOR floor reduced from 1.25% to .75%

RBC Capital, Morgan Stanley, Goldman Sachs and DVB Capital acted as joint lead arrangers on the deal. The transaction was well over-subscribed with circa 40 accounts rolling-over their existing exposure.

Judith Fishlow Minter, Head of Syndicated Finance at RBC Capital Markets says: "There was substantial demand for new money from existing lenders and the Term Loan broke for trading above its par offer price, displaying strong investor appetite for the transaction, and healthy market conditions."

Frederic Mireur, AWAS Head of Corporate Finance, says, “We are very pleased with the way our re-pricing offer was well accepted by our diversified investor base, following the 2010 Term Loan re-pricing of last March. These two transactions significantly contributed to lowering our cost of capital, a testimony of AWAS’ credit rating, as well as proven operating and financial performance. “

Victoria Tozer-Pennington
Victoria@aviationnews-online.com