Aircraft financing has started to attract new investors in recent years, as part of the broader hunt for yield in which institutional investors have been engaged since the global financial crisis.
In turn, those looking tor raise aircraft debt have started to explore new markets and structures. One striking example has been Goshawk's tapping of the Schuldschein market.
The lessor has issued two so far, debuting in November 2016 with a $95 million issue split between three- and five-year tranches. This issue, the first by an aircraft lessor, was followed up by a $100 million note in January this year.
German, UK, Dutch and Asian investors provided the debt for the first issue, FlightGlobal understands.
The Schuldschein market has long been a specialist Germany-based private-placement market, most often tapped by local and Austrian companies for debt raising.
Indeed, the market can often take time for new issuers to tap, given its specialism, and often requires lengthy talks with investors.
FlightGlobal understands that another lessor is in the process of raising debt via a Schuldschein.
Whether other lessors decide to use the Schuldschein market may not be of great import in itself. What is crucial, though, is that Goshawk's success in using the market underlines that aircraft lessors are able to tap the private debt markets.
Indeed, a number of lessors – including Goshawk – have been issuing private placements in the US market. In July last year, Goshawk got away a $567 million US private placement.
The deal, Goshawk's second unsecured private placement, was launched as a $100 million senior notes issuance but later upsized, indicating the latent investor demand for aircraft leasing names.
Fundamentally, private placements offer a way for lessors to diversify funding beyond the traditional bank market and the unsecured public bond market.
Given that most private placements do not exceed $400 million, they will not replace those methods. Instead, they simply add another vital tool to a lessor's financing toolbox.
Source: Cirium Dashboard
