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BOC Aviation seeks US$500m in Asia's first aircraft securitisation: sources
[SINGAPORE] Singapore-based BOC Aviation Pte Ltd is looking to raise at least US$500 million in Asia's first asset-backed securitisation by an aircraft lessor, tapping into growing demand for aviation assets, people familiar with the matter said.
The transaction could see BOC Aviation sell a portfolio of 24 aircraft and their associated operating leases, in return for a fee to service the planes, said the people, who did not want to be identified as details of the deal are not public.
The people said the amount had not been finalised and could change depending on how many aircraft are sold.
BOC Aviation, fully-owned by Bank of China Ltd, has grown into Asia's second-largest lessor with a portfolio of 256 aircraft after Japanese-owned SMBC Aviation Capital.
Citigroup will be the global coordinator and manage the deal with BOC International and Goldman Sachs. It is expected to be launched in a few weeks, the sources said.
The underwriters have started roadshows explaining the deal and drumming up interest in it, they added.
A BOC Aviation spokeswoman declined to comment on market transactions. Citi declined to comment, while BOC International and Goldman had no immediate comment. "Aircraft assets are in demand with U.S. investors, pension funds, so it's a good time to tap into the interest," said one person familiar with the deal.
Priced in US dollars, aircraft are comparatively easy to re-lease to different geographies and are viewed by investors as secure assets. "The key thing for us is the scalable way of basically being able to sell aircraft with lease attached, relative to the traditional way of selling ones or twos," BOC Aviation CEO Robert Martin told Reuters last month in response to a question about asset-backed securities after the lessor reported results.
Lessors such as BOC Aviation routinely sell aircraft, mostly to each other, to manage their fleets. BOC Aviation sold 12 aircraft in the first half of 2015 and has 195 aircraft on order with scheduled deliveries through to 2021.
Chinese banks such as Industrial and Commercial Bank of China and China Development Bank have also emerged as significant global players with their fast-growing leasing subsidiaries.