Aircraft leasing giant SMBC set to issue bonds

Irish-based aircraft leasing giant

SMBC Aviation Capital is likely to tap capital markets with a bond issue, according to its chief executive, Peter Barrett.

The company is one of the top five in the global aircraft finance sector, with a fleet of aircraft worth $9 billion and profits of more than $200 million.

Speaking at the Annual Global Airfinance Conference at Convention Centre in Dublin yesterday, Mr Barrett indicated the company was likely to do a bond issue shortly.

"Our plans are to tap into the capital markets," he said. Mr Barrett added that the company earned a triple B, investment grade, rating from agencies Fitch and Standard & Poor's, which assess businesses' ability to repay their debts.

He acknowledged that SMBC's Japanese parent, a consortium of the Sumitomo Financial Group and Sumitomo Corporation, provided it with finance, but he said also needed the flexibility of third-party funding.

It emerged earlier this week that another Irish aircraft lessor, Avolon, is due to get $1.25 billion in capital from its parent, the Chinese HNA Group.

Mr Barrett, whose company does a large proportion of its business in Asia, suggested fears about the Chinese economy, which have sent stock markets into a slump since the start of the year, may be overdone.

Good demand in Asia

“We continue to see good demand in Asia,” he said. He pointed out that air travel would continue expanding on the back of the region’s growing economies, trade and populations.

Robert Martin, chief executive of Bank of China Aviation, who shared the podium with Mr Barrett at the conference, pointed out that China is not in recession.

“China is still growing significantly faster than other parts of the world,” he said. He predicted that a push to boost trade links between it and other Asian countries promised to be good for air travel.

Mr Martin also noted that outbound tourism from China was growing rapidly as destination countries dealt with visa difficulties.