SMBC raises $1bn in record bond issue

Aircraft lessor SMBC Aviation Capital has borrowed $1 billion (€900 million) in a record bond issue for the Irish company.

The Dublin-based, Japanese-owned, group said on Wednesday that a subsidiary, SMBC Aviation Capital Finance DAC, has closed the sale of $1 billion in senior unsecured notes, due for repayment in 10 years, with an interest rate of 5.7 per cent.

SMBC combines debt with its own cash to buy aircraft from manufacturer, which it leases to airlines around the world, using the rent paid to fund its business and repay debt.

Thursday’s bond issue was SMBC’s largest ever and was the eighth time it has successfully tapped capital markets for cash in this way since first doing so in 2016.

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It was also the Irish company’s second bond issue this year and brings to $1.65 billion the total raised between the two. The first was in May and consisted of five-year senior unsecured notes.

SMBC maintained that the latest transaction underlined investors’ appetite for the business and further bolstered its strong financial position.

Aisling Kenny, SMBC’s chief financial officer noted that it was also the first 10-year bond issued by the company.

“Our ability to access long-term debt at competitive pricing, along with out ongoing strong shareholder support, is a key competitive advantage for SMBC Aviation Capital,” she added.

SMBC owns, manages or has committed to buy, 900 planes, making it the world’s second biggest aircraft lessor.

Japanese giants Sumitomo Mitsui Financial Group and Sumitomo Corporation, own the Irish company.