Aircraft debt sales are rebounding after Russia plane seizures

A market for aircraft bonds that all but shut down after Russia’s invasion of Ukraine is showing signs of life again, a development that makes it easier for investment firms to buy planes. Sales of airplane leases bundled into bonds have climbed to more than $5b this year, from around $1b in 2022 and 2023. Carlyle Aviation Partners and Global Jet Capital are among the leasing companies that have sold the debt in recent weeks. Russia’s incursion into Ukraine in February 2022 threw the bonds into turmoil, when Russia seized hundreds of planes owned by global leasing companies. Those aircraft were leased to Russian airlines, and were kept in the nation after western sanctions emerged. Some of the riskiest portions of airplane ABS were downgraded while other parts took losses. But in recent months, the bonds have grown more attractive to issuers and investors. ABS deals impacted by Russia’s seizures are poised to see recoveries through insurance settlements, according to Stav Gaon, a strategist at Academy Securities Inc. Some settlements have already taken place, with one transaction seeing a $62.5m payout and another picking up $50m while others continue to pursue recoveries, according to Gaon. That’s giving hope to money managers holding existing aircraft ABS that more money will start flowing to the securities. Aircraft ABS are a key part of the more than $225b raised in aircraft lessor debt financing between 2010 and August 2024, making up more than a fifth of the total, according to Deutsche Bank AG data. The comeback is also being boosted by leasing companies that bought airplanes in 2021 using short-term financing, when interest rates were lower. As bond yields have fallen in recent months, those lessors can sell bonds more cheaply, and turn their temporary financing into longer-term borrowing. <br/>