Aircraft-backed bonds grow as ECA and commercial bank finance slows

(Reuters, London, 11 October 2013) The bond markets are turning into a regular funding platform for airline companies which have in the past relied heavily on export credit agencies and commercial bank lending to finance deliveries of their vast aircraft fleets. The opening of the bond funding option has come as a blessing for airlines, which are finding it harder to fund or refinance their aircraft via the traditional route of export credit agencies and commercial bank lending. Beginning in January, higher fees and equity requirements mandated by the OECD went into force, according to Boeing Capital Corp, which in a note to investors said that, barring any severe shock, export credit support for new aircraft deliveries is expected to keep declining. Moreover, commercial bank lending has become more expensive, leaving the capital markets as the most cost-effective option for funding.