Japan investors set to close more JOLCOs

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There is optimism that more Japanese operating lease with call option (JOLCO) transactions will be closed this year.

An estimated two thirds of the delegates at the International Society of Transport Aircraft Trading (ISTAT) conference in Tokyo today, said that 2013 will see an increase in the number of deals compared with last year.

More than half the voting audience expects a "increase somewhat" of the product this year while another 15% see a sign of an increase.

Nearly a quarter of the audience said the number of transactions will remain the same in 2013 as in 2012, while the remaining 12% anticipates a decrease.

Nomura Babcock and Brown's managing director Shiro Kambara said there has been a shortage of transactions in the marketplace.

"Equity demand in the JOLCO has been quite strong over the past two years despite the negative impact caused by natural disasters in Japan and the depreciation of the yen against other currencies," he told delegates.

Under Japan's new economic policy it has been all about creating and distributing money. Prime Minister Shinzo Abe has ordered one of the largest ever stimulus package and the country's lenders and investors are expected to benefit from Japan's monetary upheaval.

Kambara says the Japanese investor 'sentiment' is to opt for more JOLCO transactions.

In the next five years, the level of interest in JOL and JOLCO structures will remain the same for a third of the audience. Another third anticipates a lower interest of interest in the next five years.

However a quarter of the audience anticipates a higher volume of interest while another 9% expects a much higher interest level than today.