In 2023 Avolon raised $4.9 billion of debt across both the public and private markets. This included two unsecured bond deals ($750 million in May and $400 million in December, the extension and upsizing of a $1.7 billion Term Loan B facility and an $810 million secured bank facility.

Commenting on Avolon’s financing activity in 2023, Avolon CFO Ross O’Connor said: ‘Avolon’s financing strategy is to target diverse and varied sources of liquidity, maintaining the flexibility to access private markets during periods of high volatility in public markets.’ At end of last year Avolon had $7.2 billion of available liquidity and leverage at 2.2x net debt to equity.

‘We have leveraged our strong relationships with banks and institutional investors to ensure competitively priced funding with swift execution,’ O’Connor added. ‘Our strong balance sheet, high levels of liquidity and investment grade credit rating put us in a position to be opportunistic and capitalise on any organic or inorganic opportunities that present themselves.’

[L-R] Avolon's James Outram, Head of Transaction Legal EMEA; Ross O'Connor, Chief Financial Officer and Paraic Quinn, Head of Capital Markets and Training.

Two transactions, in particular, were of award winning calibre in 2023 – the extension and upsizing of a $1.7 billion Term Loan B facility and the speedy execution of an $810 million secured bank facility provided by 10 global banks.

The extension of the Term Loan B facility pushed its maturity out from January 2025 to June 2028, with an upsizing of $250 million bringing the total facility to $1.68 billion. It was competitively priced at SOFR plus 2.5% with a SOFR floor of 0.5%, subject to an original issue discount of 99.0. This extension helped support Avolon’s high liquidity levels and put it in a position to be opportunistic and capitalise on any organic or inorganic opportunities that might become available.

The extension also highlighted Avolon’s ability to leverage its strong banking relationships. As O’Connor pointed out: ‘The high level of demand from our banking partners allowed us to upsize the deal with $250 million new capital … and allowed us to introduce new lenders to the facility. The execution reflects the quality of the Avolon franchise in a volatile year for US debt capital markets.’

The second deal, an $810 million secured bank facility, further demonstrated Avolon’s ability to leverage the wide range of financing options it has to raise capital in private markets when volatile public markets made unsecured bond market financing less attractive. With a seven years terms, this senior secured facility enabled the borrower, which is an Avolon subsidiary, to fund the acquisition of a portfolio of aircraft on lease to a diversified list of airlines. The obligations of the borrower are guaranteed by Avolon, with each drawing materialized by a loan secured by an aircraft and each loan being cross-collateralised and cross-defaulted with each other.

Here, too, Avolon leveraged the strong banking relationships it has built and maintained since inception, with 10 global banks participating in the facility. It was also very competitively priced compared to other available debt channels against the backdrop of a volatile public market environment. The strength of Avolon’s relationships with the participating banks was also reflected in the speed of execution of this transaction, with less than three months between signing of the term sheet and signing of the documentation.

Mandated Lead Arrangers and Bookrunners on this deal were BNPP, CACIB, KFW, SocGen & MUFG; Mandated Lead Arrangers were NatWest, Bank of Ireland, SMTB, CTBC and KDB. JP Morgan was also a participant.

Discussing the transaction, Mary O’Neill, Partner and head of the Asset Finance Group in Ireland, Maples and Calder (Ireland), which advised on the deal, stated: ‘This was a significant transaction for Avolon as well as the market more generally, representing the confidence placed in Avolon and the wider aviation leasing industry by the commercial debt market, evidenced by the participation of a large cross-section of European and Asian bank lenders.’

Keith Hughes Director – Corporate Banking Ireland, Bank of Ireland Corporate Banking, commented: ‘We are delighted that Avolon’s financing programme has won the Aviation Leasing Loans and Financing category. Bank of Ireland has been a banking partner of Avolon since formation in 2010. Our relationship has grown with this top tier Irish lessor and we are now a material lender across a number of Avolon’s secured and unsecured debt transactions.’