Air Lease improves its unsecured facility to $2bn after S&P rating

This story is sourced from

Air Lease added $300 million to its unsecured financing facility thanks in part to the addition of a second investment-grade rating, which was received in the third-quarter.

“Having achieved the investment-grade rating from S&P [Standard & Poor’s] and Kroll, we believe that our access to capital will continue to broaden,” said Gregory Willis, chief financial officer of Air Lease on a third-quarter earnings call, adding: “And one of the first signs of this came from the banking community.”

In late August, Air Lease received a corporate credit rating of "BBB-" with a stable outlook from Standard & Poor's, following an “A-“ rating from Kroll Bond Ratings earlier in the year.

The lessor expanded its unsecured revolving bank facility in May to $1.7 billion, but according to Willis, Air Lease decided to reopen the facility and added $300 million in new capacity in the quarter after receiving interest from new banks and some existing lenders.

Its unsecured corporate bank revolver now totals $2 billion in size, with a margin of 125 basis points over Libor. The bank group includes 43 institutions.

Air Lease ended the quarter with secured debt of 18% of total assets.

During the third quarter, Air Lease delivered eight aircraft from its orderbook, increasing the fleet to 182 aircraft.

Air Lease has no leases expiring this year, and no more than 5% of the aircraft in its fleet up for renewal in each year through 2017, according to John Plueger, president and chief operating officer of Air Lease.

The lessor has 11 new aircraft delivering from its orderbook in the fourth quarter. The majority of these aircraft are expected to deliver in the second half, and this timing does impact quarterly revenue, says Plueger.

Another development resulting from the S&P rating is that Air Lease’s three public bonds are now included in the Barclays investment-grade index. This will help the liquidity and market appeal of the lessor's senior notes as it continues to build out a balanced debt maturity ladder, says Willis. "We believe that the liquidity provided in the corporate bond market provides a more efficient financing strategy for our company than secured funding alternatives,” he adds.