Muzinich & Co has announced the seeding of its Aviation Senior Secured Strategy, at US$300 million. The investment firm stated that its Senior Secured Strategy had “attracted the interest of European institutional investors who have provided the capital and has an overall target capacity of US$1.5 billion”.
Muzinich Senior Secured Strategy is described as seeking “compelling risk-adjusted returns and attractive income by looking to provide secured aircraft debt financing to global airlines and leasing companies”. Muzinich & Co will act as sourcer and portfolio advisor.
“We are pleased institutional investors have identified Muzinich as their investment partner in aviation finance because of our credit-focused investment approach and strong in-house technical expertise,” said Brian Lau, portfolio manager at Muzinich & Co. “We believe in the potential long-term, risk-adjusted returns available in aviation secured debt investments. For investors who are either new entrants or underweight the asset class, the pandemic has created an attractive entry point with the potential for increased returns on high quality airlines and assets.”
Muzinich launched its aviation finance business in February 2020 and has become an active player in providing debt as well as leasing solutions to airlines globally. Most recently in May, Muzinich acted as arranger for both the lease and financing for one A350-900 and one 787-10 delivered to Singapore Airlines in 2019.
Ashwath Venkataramani, Portfolio Manager at Muzinich commented at the time the deal closed: “We are delighted to be able to partner and support Singapore Airline’s financing requirement and look forward to supporting the airline’s growth in the future. Singapore Airlines is a world-renowned carrier and one of the most sought-after names for our investors’ aviation portfolio.”
Lau said: “The aviation industry has been one of the hardest hit sectors during the pandemic crisis. We however believe in the long-term risk-adjusted return in this asset class, and are pleased to support our airline clients during these challenging times by providing innovative financing solutions.”
Senior debt financing for the acquisition of the A350-900 aircraft was solely arranged and underwritten by Crédit Agricole Corporate and Investment Bank (CACIB) who acted as sole mandated lead arranger, senior facility agent and security trustee as well as hedge counterparty. CACIB and NTT TC Leasing acted jointly as senior lenders.
Senior debt financing for the acquisition of the B787-10 aircraft was arranged and underwritten by KEB Hana Bank, which acted as global coordinator, senior facility agent and security trustee as well as hedge counterparty. KEB Hana Bank, Woori Bank, Woori Global Markets Asia Ltd. and Taipei Fubon Commercial Bank acted jointly as senior lenders.