Aircraft lessor SMBC Aviation Capital borrows €430m at lowest rate

Additional financing allows SMBC to ‘capitalise on opportunities’, says CFO

SMBC is one of the top five aircraft lessors in the world and one of several leading businesses in that sector based in the Republic

SMBC is one of the top five aircraft lessors in the world and one of several leading businesses in that sector based in the Republic

 

Aircraft lessor SMBC Aviation Capital is borrowing €430 million at the lowest interest ever paid by the Irish company.

Dublin-based SMBC buys aircraft from manufacturers Airbus and Boeing, using a combination of its own cash and debt, and leases the ’planes to airlines around the world.

The company confirmed on Monday that its subsidiary, SMBC Aviation Capital Finance DAC, completed the sale of $500 million (€431 million) in bonds due for repayment in October 2026.

SMBC said the bonds carry interest of 1.9 per cent, equivalent to US Treasury rates plus 0.93 per cent, which the company noted was the “tightest spread” at which it has raised capital to date.

The bonds are unsecured and fully guaranteed by SMBC Aviation Capital. The deal follows SMBC’s seven-year $500 million bond issue in June this year.

Eithne Manning, acting chief financial officer, said the move further strengthened the company’s liquidity position.

“This additional financing means we are well positioned to capitalise on opportunities within an airline sector that is recovering from the pandemic,” she added.

SMBC is one of the top five aircraft lessors in the world and one of several leading businesses in that sector based in the Republic.

As of the end of June, the company had a fleet of 734 owned, managed or committed aircraft.

Japan’s Sumitomo Mitsui Financial Group and Sumitomo Corporation own SMBC.