Avolon prices investment grade rated $2.5bn senior notes offering

Lauren Eldershaw
By Lauren Eldershaw April 12, 2019 13:34

Avolon prices investment grade rated $2.5bn senior notes offering

Avolon has priced its $2.5bn private offering by its wholly owned subsidiary, Avolon Holdings Funding Limited. The offering comprises $750 million of 3.625% three-year senior notes with a yield to maturity of 3.650%; $1 billion of 3.950% five-year senior notes with a yield to maturity of 4.064%; and, $750 million of 4.375% seven-year senior notes with a yield to maturity of 4.454%. The notes will be fully and unconditionally guaranteed by Avolon.

The offering was significantly upsized from an initial launch size of $1.8 billion, reflecting institutional investors’ demand, says the lessor. The offering is expected to close on or about April 16, 2019, subject to customary closing conditions. Proceeds from the offering will be used for general corporate purposes, including the repayment of outstanding legacy secured debt, consistent with a commitment to reduce the level of secured debt in Avolon’s capital structure to 30% of total assets.

Moody’s Investors Service has upgraded Avolon’s corporate family and senior unsecured ratings to investment grade (Baa3). Fitch Ratings and S&P Global Ratings have also announced their intention, on successful completion of the offering, to upgrade Avolon’s issuer and senior unsecured debt ratings to investment grade (both BBB-).

Andy Cronin, Avolon CFO, commented: “Today represents a significant milestone for Avolon and marks the delivery of a key corporate objective for 2019. 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.

An investment grade rating will provide us with even 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.”

Lauren Eldershaw
By Lauren Eldershaw April 12, 2019 13:34