The lowest price is not always the best deal; tenor and certainty of execution can command higher prices and win deals. This was the message airlines with aircraft to finance gave to Korean investors in Seoul yesterday at the first Airline Economics Growth Frontiers Korea conference.
Regardless of the growth in appetite for aviation assets, too few deals have been completed in Korea as investors remain focused on top tier credit airlines and big ticket assets. Although the Labrador ABS was a tremendous achievement for all parties, it was a challenging and lengthy process with one investor pulling out at the eleventh hour. The deal was saved with a new investor being brought on board but after 12 months of hard work it almost failed at the final hurdle. However, the debt portion of the deal executed in three days into the US capital markets, which impressed many Korean investors. The education process is continuing in the country but this deal, for all its challenges, is considered as a pivotal moment for the fledgling market. That’s not to say there will be a rush of portfolio deals flooding the market but one is being worked on now and others will follow tentatively. Again, certainty of execution is a big concern for airlines and arrangers but that hurdle has been lowered considerably and many companies that had been keeping out of Korea for this reason are now tempted to look again at the benefits of tapping into this new pool of capital.
Thank you to all our partners, sponsors, chairmen, speakers and delegates for making our first Growth Frontiers event in Seoul such a runway success.Date: February 22, 2017