Privately placed aircraft debt is starting to attract more Asian-based capital, Kroll Bond Rating Agency has observed.
"Non-US investors active in buying private-placement debt have mainly been from Europe and Japan," writes KBRA in a note. "However, other Asian investors, especially from China and more recently South Korea, have shown an increased appetite and are actively investing in such issues."
The ratings agency adds: "Indeed, a number of large insurance companies and pension funds in Asia have been growing their exposure to the sector given their ability to invest in large issues as well as their keen interest in the dollar-denominated returns they offer."
KBRA believes the private-placement market has become an important area for both aircraft issuers and lenders in recent times.
Typically, private placements are used for transactions that "are either too small or are too bespoke for the broader public markets, or when public information disclosure exemptions are more expedient", the agency notes.
Additionally, first-time issuers can use the structure to gauge investor appetite for their offerings before venturing into the public bond markets.
KBRA estimates that the volume of private placements for aviation-related debt, including asset-backed securitisation and recourse debt, has increased from roughly $720 million in 2013 to $4.1 billion in 2016. The agency reckons around $610 million of privately placed aircraft debt has been issued so far in 2017.
Source: Cirium Dashboard
