Wednesday 24 April 2019

Investment grade for aircraft lessor Avolon

Avolon
Avolon
John Mulligan

John Mulligan

Dublin-based aircraft lessor Avolon has upsized a $1.8bn senior bond launch to a $2.5bn (€2.2bn) investment-grade offering on foot of strong institutional demand.

It’s the first time that Avolon, whose chief executive is Domhnal Slattery, has been able to sell investment-grade bonds – a significant milestone for the lessor.

Avolon is the world's third-largest aircraft lessor, with a fleet of 971 owned, managed and on-order jets.

The notes, being issued by a subsidiary of Avolon, are rated investment grade by Moody’s, S&P, Fitch and KBRA.

Moody’s has already upgraded Avolon’s corporate family and senior unsecured ratings to investment grade, while Fitch and S&P will upgrade the company’s issuer and unsecured debt ratings to investment grade once the offering has been successfully completed.

The note being issued comprise $750m of 3.626pc senior notes due in 2022; $1bn of 3.95pc senior notes falling due in 2024; and $750m of 4.454pc notes due in 2026.

The offer will close on or about April 16.

“Today represents a significant milestone for Avolon and marks the delivery of a key corporate objective for 2019,” said chief financial officer Andy Cronin this morning.

“Our achievement of an investment grade rating, ahead of the expected timeframe, reflects the progress we have made to increase the level of unencumbered assets within the business and our metrics as an industry leader in terms of scale, asset quality and airline customer diversification,” he added.

Mr Cronin said the investment grade rating will provide Avolon with greater financial flexibility and access to a deep pool of capital.

“The strong market demand for this offering reflects confidence in Avolon’s credit profile and the long-term prospects for the business,” he said.

Last year, Orix Aviaiton, the Dublin-based jet leasing unit of Japanese investment group Orix, acquired a 30pc stake in Avolon. The stake was sold by Chinese conglomerate HNA as it sought to reduce its debt pile.

The remainder of Avolon is owned by stock market-listed Bohai Leasing, which is a subsidiary of HNA.

Irish Independent

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