Aircraft lessor Avolon is setting up a new short-term $1.5 billion borrowing facility, focusing on institutional investors, as the company moves to diversify its funding sources.
The proceeds from any issuance under the new programme are expected to support general corporate purposes, such as funding aircraft acquisitions and the repayment of existing debt.
Under the plan, the company’s subsidiary Avolon Aerospace Leasing Limited has established a commercial paper programme, allowing it to issue short-term, unsecured commercial paper notes. The total amount outstanding under the scheme cannot exceed $1.5 billion, and will be fully and unconditionally guaranteed by Avolon and certain subsidiaries.
The proceeds from any issuance under the new programme are expected to support general corporate purposes, such as funding aircraft acquisitions and the repayment of existing indebtedness.
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The move is a “milestone” for the company, the Dublin-based aircraft lessor said, giving it an additional flexible source of short-term capital alongside its existing revolving credit facilities.
“The establishment of this commercial paper programme marks another important milestone in the continued evolution of Avolon’s funding and liquidity strategy,” said chief financial officer Ross O’Connor. “It provides additional flexibility to optimise our funding mix, supported by our investment-grade credit ratings, strong liquidity position and robust balance sheet, whilst broadening our investor base and diversification.”
Avolon last year raised $1 billion in an unsecured dual tranche bank facility with six banks in the Middle East, and a new $1.1 billion senior unsecured facility.
The Dublin-based company generated lease revenue of $2.8 billion last year, with total revenue of $3 billion and operating cash flow at a record of $2.1 billion.
It acquired 168 aircraft, including more than 100 as part of deal with Castlelake Aviation. It also ordered 90 new aircraft during the year, including 75 Airbus A321s and 15 A330s due for delivery out to 2033.
