AerCap bond issuance upsized to $1bn

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By TESTCustomwebLP TESTCustomwebLP June 23, 2015 10:18

AerCap bond issuance upsized to $1bn

AerCap offering of $800 million senior notes announced yesterday is reported to have been upsized to $1bn due to strong demand. The pricing was also tightened to 4.250% on the $500 million five-year tranche and 4.625% on the $500 million seven-year notes.

The notes, issued by AerCap Ireland Capital Limited and AerCap Global Aviation Trust, AerCap’s wholly-owned subsidiaries, are fully and unconditionally guaranteed on a senior unsecured basis. The net proceeds from the notes will be used for general corporate purposes, including acquiring, investing, financing or refinancing aircraft assets, and to repay indebtedness.

Credit Suisse, Deutsche Bank and Goldman Sachs are serving as joint book running managers for the underwritten public offering.

Passive bookrunners are Barclays, Bank of American Merrill Lynch, Citi, Credit, JPMorgan, Mizuho, Morgan Stanley, Royal Bank Canada, UBS and Wells Fargo Securities. Co-managers are BNP Paribas, Fifth Third, HSBC and Suntrust.

This is an impressive execution for AerCap, which only a few weeks ago issued $500 million of junior subordinated notes to partially fund the buy back of an additional 15.7 million of its ordinary shares from AIG for $750 million. Those 30 year notes initially accrue interest at a fixed interest rate of 6.5% for a period of ten years whereupon they will convert to a floating rate. The issuer will have the right to defer any interest payment on the notes for up to five consecutive years per deferral period. The notes are guaranteed by AerCap and its subsidiaries. Although unusual, this sort of structure is not unheard of but it is as close to equity as you can get in a debt structure, but it is priced much more cheaply and is therefore accretive, which is a fantastic deal for AerCap shareholders.

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By TESTCustomwebLP TESTCustomwebLP June 23, 2015 10:18