The $30 billion price tag that AerCap is paying for its
It also marries two distinct strategies when it comes to securitization.
GECAS (GE Capital Aviation Services) has tapped asset-backed investors in recent years by issuing bonds paid by proceeds from leasing jet aircraft to airlines as well as from sales of planes from its managed portfolio made up mostly of older, narrowbody Boeing and Airbus models.
GECAS has sponsored three deals in 2018 and 2019 totaling $1.6 billion, and has issued
Aercap, on the other hand, has focused primarily on utilizing unsecured debt financing, including $5 billion in high-yield bonds in 2020 and 2021 through its AerCap Global Aviation Trust. Deutsche Bank airline industry analyst Douglas Runte wrote in a research note this week that while Aercap has made use of lease-backed ABS deals in its history, “has not issued aircraft ABS in more than five years.”
If the deal receives necessary shareholder and regulatory approvals, Deutsche analysts expect the deal “will be financed long-term through a mix of predominately unsecured corporate debt, recourse secured corporate debt and hybrid securities.”
While ABS debt may not be part of the expected mix of funding to close the deal, Runte wrote Deutsche expects the newly combined firm “to make use of aircraft ABS as a way of managing portfolio, eliminating any exposure concentrations and sell older aircraft.”
