(Bloomberg) -- Alternative investment firm Castlelake LP has secured more than $1 billion of financing for its purchase of over 60 aircraft, according to a statement seen by Bloomberg News.
The firm is receiving a term loan facility from a group of lenders including Deutsche Bank AG, Goldman Sachs Group Inc., BNP Paribas SA and Mitsubishi UFJ Financial Group, according to the statement. The debt has a five-year tenor with an option to extend, and the firm may look to the asset-backed securities market for funding sometime next year, according to a person with knowledge of the matter, who asked not to be identified discussing a private matter.
Castlelake said in the statement that the commitments it has received from the banks are designed to provide longer-term flexibility. The aircraft Castlelake is expected to finance with the loan are already on lease with around 30 airlines globally.
Aircraft leasing has been growing steadily over the last decade. That’s as airlines increasingly sell older parts of their fleet to raise capital for new planes, and then lease back the flights they sold to fill in any capacity gaps. The sector is being boosted by airlines extending their lease deals because new production has been slow due to manufacturing crunches.
“The growth in the leasing share of the world fleet has been boosted by a high volume of sale-leaseback transactions between airlines and lessors following the pandemic, which is predicted to continue into the near-term future,” according to a KPMG report from January.
Aviation debt sold in the asset-backed securities market has reached a three-year high, bolstered by issuers tapping the market to close out shorter-duration credit facilities. The ABS market slowly opened back up in late 2023 to bonds tied to aircraft debt after a hiatus that started in 2022 when Russia invaded Ukraine. Since then, a handful of issuers are back in the market, such as Carlyle Aviation Partners, which sold asset-backed bonds this June.
Castlelake recently sold a $5 billion portfolio of 118 jets to Avolon Holdings.
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