New debt sources eye aviation finance market

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New debt providers are eyeing the aviation sector with the aim of filling some of the void left by various banks, which have been forced to ease their funding efforts due to the global financial markets fallout, say sources.

"We are seeing some interest from Asian insurance companies, hedge founds and private equity players that are looking to be debt providers in aviation financings," says a European banker. "There is a real need for new debt sources and these players realise the opportunity."

Another banker agrees adding: "These sources also realise debt can be a less risky investment compared with putting equity into aviation deals."

However, both bankers note, to date, efforts from two US sources to provide debt funding, in the form of pre-delivery payment financing, have been derailed.

"These efforts have not worked yet, but that is not to say they won't eventually, or that sources from Asia or elsewhere won't be successful," says the European banker.