Air Lease Corporation Announces Pricing of Offering of C$400 Million of Senior Unsecured Medium-Term Notes

Rhea-AI Summary

Air Lease Corporation (AL) announces the pricing of C$400 million senior unsecured medium-term notes due June 1, 2028, with a 5.40% interest rate. The offering is expected to close on February 28, 2024, and the net proceeds will be used for general corporate purposes, including aircraft purchases and debt repayment.

Financial Analyst

The offering of C$400 million in additional senior unsecured medium-term notes by Air Lease Corporation is a strategic financial move aimed at bolstering the company's liquidity and capital structure. The 5.40% interest rate is indicative of the current market conditions and investor sentiment towards the company's creditworthiness. Given the maturity date of June 1, 2028, these notes will provide a medium-term investment horizon for bond investors.

The decision to issue notes in Canadian dollars could be a hedge against currency risk or a strategic move to attract a broader base of investors, particularly those looking to diversify with assets denominated in currencies other than the US dollar. The use of proceeds for general corporate purposes, including the purchase of commercial aircraft and repayment of existing debt, suggests a proactive approach to managing the company's balance sheet and growth initiatives.

Furthermore, the fungibility with existing notes for U.S. federal income tax purposes implies that these notes will be readily exchangeable and could enhance liquidity in the secondary market. The involvement of BofA Securities as the book-running manager reflects the confidence of major financial institutions in the offering's success. Investors will likely scrutinize the terms of the offering, including the interest rate compared to industry standards and the credit rating of the issuer to assess the risk-return profile.

Market Research Analyst

The additional issuance of medium-term notes by Air Lease Corporation is a reflection of the company's growth strategy and investor appetite for corporate debt in the aerospace leasing industry. As the industry recovers from the impacts of global disruptions, such as the COVID-19 pandemic, airlines are gradually increasing capacity and renewing fleets, which could lead to increased demand for leased aircraft.

The choice of medium-term notes over other forms of financing, such as short-term debt or equity, may indicate the company's confidence in its long-term revenue streams and ability to meet debt obligations without diluting shareholder value. The fixed interest rate of 5.40% should be compared to the average yield of corporate bonds in the same sector and credit rating class to evaluate its competitiveness.

Investors might also consider the implications of the notes' maturity coinciding with anticipated industry cycles, such as projected peaks or troughs in aircraft demand. The company's strategic use of the proceeds for fleet expansion and debt management could position it favorably in the market, provided that the industry maintains a trajectory of growth and stability.

Legal Expert

The issuance of additional notes under the same terms and CUSIP number as the existing notes ensures a streamlined process for both the issuer and investors. The legal framework governing these notes, as outlined in the indenture, provides a structured approach to the rights and obligations of the parties involved.

For investors, the interchangeability and fungibility with existing notes is a significant factor, as it affects the ease of trading and tax considerations. The company's adherence to SEC regulations and the provision of a shelf registration statement demonstrate compliance with disclosure and regulatory requirements, which is crucial for investor confidence.

Canadian investors will need to pay attention to the private placement nature of the offering and the specific conditions pertaining to accredited investors and permitted clients under Canadian securities laws. These legal nuances can affect the accessibility of the offering to certain investor classes and the overall market reception of the notes.

LOS ANGELES--(BUSINESS WIRE)-- Air Lease Corporation (NYSE: AL) (the “Company”) announced the pricing on February 20, 2024 of its offering of C$400 million aggregate principal amount of additional 5.40% senior unsecured medium-term notes due June 1, 2028 (the “Notes”). The sale of the Notes is expected to close on February 28, 2024, subject to satisfaction of customary closing conditions.

The Notes will mature on June 1, 2028 and will bear interest at a rate of 5.40% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2024. Owners of the Notes will receive payments relating to their Notes in Canadian dollars.

The Company intends to use the net proceeds of the offering for general corporate purposes, which may include, among other things, the purchase of commercial aircraft and the repayment of existing indebtedness.

The Notes will have the same terms as, and constitute a single tranche with, the C$500 million aggregate principal amount of 5.40% Medium-Term Notes, Series A, due June 1, 2028 (the “Existing Notes”) that the Company originally issued on November 29, 2023. The Notes will have the same CUSIP number as the Existing Notes and will be issued as additional notes under the indenture governing the Existing Notes. The Notes are expected to trade interchangeably with the Existing Notes immediately upon settlement and be fungible with the Existing Notes for U.S. federal income tax purposes. Upon issuance of the Notes, the outstanding aggregate principal amount of 5.40% Medium-Term Notes, Series A, due June 1, 2028 will be C$900 million.

BofA Securities is acting as book-running manager for the offering of the Notes.

The Notes are being offered pursuant to the Company’s effective shelf registration statement, previously filed with the Securities and Exchange Commission (the “SEC”) on May 7, 2021, and a pricing supplement, dated February 20, 2024, supplementing the prospectus supplement, dated May 7, 2021, supplementing the base prospectus, dated May 7, 2021, as may be further supplemented by any free writing prospectus and/or additional pricing supplements the Company may file with the SEC, and in Canada on a private placement basis pursuant to a Canadian offering memorandum to accredited investors who are also permitted clients within the meaning of Canadian securities laws. For more complete information about the Company and this offering before you invest, you should read the related base prospectus, related prospectus supplement, related pricing supplement and the documents incorporated by reference in each (which may be obtained for free by visiting EDGAR on the SEC’s website at www.sec.gov), or if you are a Canadian investor, you should read the Canadian offering memorandum. Copies of the related base prospectus, related prospectus supplement and related pricing supplement may be obtained by contacting: Merrill Lynch Canada Inc. toll free at (800) 294-1322.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the Notes, nor shall there be any sale of the Notes in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The distribution of the Notes in Canada is being made on a private placement basis only and is exempt from the requirement that we prepare and file a prospectus with the relevant Canadian securities regulatory authorities. Accordingly, any resale of the Notes must be made in accordance with applicable Canadian securities laws which may require resales to be made in accordance with prospectus and dealer registration requirements or exemptions from the prospectus and dealer registration requirements of applicable Canadian securities laws.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the expected closing of the offering and the intended use of proceeds. Such statements are based on current expectations and projections about the Company’s future results, prospects and opportunities and are not guarantees of future performance. Such statements will not be updated unless required by law. Actual results and performance may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors, including but not limited to, unexpected delays in the closing process for the Notes, unanticipated cash needs, and those risks detailed in the Company’s filings with the SEC, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240220370152/en/

Investors:

Jason Arnold

Vice President, Investor Relations

Phone: +1 310.553.0555

Email: investors@airleasecorp.com

Media:

Laura Woeste

Senior Manager, Media & Investor Relations

Ashley Arnold

Senior Manager, Media & Investor Relations

Phone: +1 310.553.0555

Email: press@airleasecorp.com

Source: Air Lease Corporation

FAQ

What is the amount of the additional notes offered by Air Lease Corporation (AL)?

Air Lease Corporation (AL) announced the pricing of C$400 million aggregate principal amount of additional 5.40% senior unsecured medium-term notes due June 1, 2028.

When will the sale of the notes close?

The sale of the notes is expected to close on February 28, 2024, subject to satisfaction of customary closing conditions.

What will the net proceeds from the offering be used for?

The net proceeds of the offering will be used for general corporate purposes, which may include, among other things, the purchase of commercial aircraft and the repayment of existing indebtedness.

Who is acting as the book-running manager for the offering of the notes?

BofA Securities is acting as the book-running manager for the offering of the notes.

When will the notes mature?

The notes will mature on June 1, 2028.

What is the interest rate on the notes?

The notes will bear interest at a rate of 5.40% per annum, payable semi-annually in arrears on June 1 and December 1 of each year.

In what currency will owners of the notes receive payments?

Owners of the notes will receive payments relating to their notes in Canadian dollars.

How does the offering of the notes relate to the existing notes issued by Air Lease Corporation (AL)?

The notes will have the same terms as, and constitute a single tranche with, the C$500 million aggregate principal amount of 5.40% Medium-Term Notes, Series A, due June 1, 2028 that the company originally issued on November 29, 2023.