Avolon sells 41 aircraft to its special purpose company Sapphire
Sapphire borrows $768m to buy the aircraft by issuing bonds to institutional investors
Dómhnal Slattery: he said the sale of the aircraft to Sapphire opened another means for the Irish company to attract third-party investors to aircraft leasing. Photograph: Bloomberg
Aircraft lessor Avolon has sold 41 aircraft to its recently-created Sapphire special purpose company for $768 million (€621m).
Sapphire borrowed $768.4 million to buy the craft by issuing a series of bonds at interest rates varying between 4.25 per cent and 7.5 per cent to institutional investors. Avolon confirmed details of the bond issue on Friday.
Under the deal’s terms Sapphire will own the craft, valued at $962.4 million, and collect the rent due on them, which it will use to pay off the bonds.
Avolon will continue to manage the leases, and will keep a minority stake in Sapphire, whose majority shareholders will be the investors which bought the company’s bonds.
The transaction between Sapphire and Avolon, known as a securitisation, is common in aircraft leasing. It allows lessors such as Avolon to free up cash to purchase more craft or to pay off debt or both.
Commenting on the deal, Avolon chief executive Dómhnal Slattery said the sale of the craft to Sapphire opened another means for the Irish company to attract third-party investors to aircraft leasing.