AerCap to raise $2.6bn of high-yield bonds
Irish-led aviation leaser AerCap is set to raise $2.6bn (€1.86bn) of high-yield bonds as early as today in one of the biggest deals of the year.
The debt is being raised to pay for the takeover of rival ILFC.
Rating agencies said the move was positive for the company because it catapults AerCap to market leader status.
After the takeover of ILFC, AerCap will have a $37bn fleet of nearly 1,200 owned aircraft leased to over 200 airlines globally.
AerCap chief executive Aengus Kelly was formerly an executive at the late Tony Ryan's Guinness Peat Aviation (GPA).
AerCap is listed on the New York Stock Exchange, headquartered in the Netherlands and has offices in Ireland, the United States, China, Singapore and the United Arab Emirates.
UBS and Citi are joint physical bookrunners on the bond deal, which will be made up of three three-, five- and seven-year tranches.
The new financing will replace a $2.75bn bridge facility put in place when the takeover of ILFC deal was announced in December.
The bond is expected to price later this week following investor meetings in New York yesterday, and Boston today.
An investor call was also due to be held.
The sale of ILFC by AIG represents the latest major transfer of a fleet of leased aircraft and comes after RBS sold its Dublin-based leased aircraft fleet in 2012 and CIT's re-emergence from bankruptcy, according to Fitch.
"Once the AerCap deal closes, material consolidation in the industry will be complete, with two large players (AerCap and GECAS) controlling close to half of all lessor-owned aircraft globally," the rating agency said.
GECAS is the aircraft financing arm of General Electric.
"However, there may still be M&A opportunities for the smaller players."
The bonds will be issued by AerCap Ireland Capital Limited and AerCap Global Aviation Trust.
Both are subsidiaries of AerCap Holdings and the debt will benefit from a guarantee by the parent company and various other subsidiaries.
Barclays, Bank of America Merrill Lynch, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Morgan Stanley, RBC and RBS are joint bookrunners.
(Additional reporting Reuters IFR)