Aircastle changes capital structure, may take on more debt to be IG

By Devika Patel

Knoxville, Tenn., March 14 – Aircastle Ltd. could take on more debt in its bid to become investment-grade.

The company has changed its capital structure since its early days and now focuses on raising funding through the unsecured debt markets.

“Over time, we’ve evolved our capital sources and our access to capital,” chief executive officer Michael Inglese said at the J.P. Morgan Aviation, Transportation and Industrials Conference in New York on Wednesday.

“In our early days, we were entirely a ‘pure debt’ approach to the business, very active in the ABS market pre-financial crisis,” Inglese said.

The company evaluated its capital sources in 2010 and decided to try the unsecured markets.

“Post-financial crisis, we looked at the business we had built,” Inglese said.

“We looked at the track record we had formed over the first four or five years of our existence, the credit profile of our business.

“We looked at the investment opportunities we saw in the 2010, 2011 timeframe and concluded that we would be well served to go into the unsecured market and begin to evolve our capital structure in that marketplace,” Inglese said.

The company completed its first deal in 2010 and changed its capital structure.

“We did our first deal back in the summer of 2010, at a very high coupon with a double B plus rating, but at that time we were looking at very attractive investment returns that we thought we could make a very fine spread for our investors in the context of pursuing that path and over the last seven years we have changed the capital structure,” Inglese said.

“We continue to employ that capital structure with conservative financial leverage and a balanced approach overall in the business to capital allocation,” Inglese said.

The company could take on more debt.

“We think we could run this business with some more debt in the context of being an investment-grade credit profile and striving to get to that investment-grade rating,” Inglese said.

Aircastle completed a $500 million notes sale in 2017.

“In terms of capital markets, last year we did a $500 million issuance at 4 1/8 [%] to refinance some higher cost debt,” Inglese said.

On March 6, 2017, Aircastle priced a $500 million issue of senior notes due May 1, 2024 (Ba1/BB+) at par to yield 4 1/8%.

The yield printed at the tight end of the 4 1/8% to 4¼% yield talk. Initial guidance was 4¼% to 4½%.

Citigroup Global Markets Inc. was the left bookrunner for the public offering. BNP Paribas Securities Corp., Credit Agricole CIB, Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, MUFG and RBC Capital Markets were the joint bookrunners.

Proceeds were earmarked for general corporate purposes, including debt redemption.

Based in Stamford, Conn., Aircastle acquires, leases and sells commercial jet aircraft to airlines.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.