Aircraft leasing firm SMBC Aviation Capital, through its wholly owned subsidiary SMBC Aviation Capital Finance DAC, has priced a five-year bond amounting to US$500 million.The senior unsecured notes, priced at 93bp above the US Treasuries, represents the company's tightest spread achieved to date. In fact, its bonds currently trade the tightest in the sector.

The notes,which carry a coupon of 1.9%, are fully and unconditionally guaranteed by SMBC Aviation Capital. The offering was led by SMBC Nikko Capital Markets.

“This further bond issuance at an industry-leading pricing further strengthens SMBC Aviation Capital’s strong liquidity position," says Eithne Manning, acting chief financial officer of SMBC Aviation Capital. "This additional financing means we are well-positioned to capitalize on opportunities within an airline sector that is recovering from the pandemic.”

The latest transaction follows the company’s US$500 million bond issuance in June, which came shortly after the company had its investment grade A- ratings confirmed by S&P and Fitch.  The seven-year senior unsecured notes carried a 2.3% coupon  and were priced at 110bp above the US Treasuries. 

SMBC Aviation Capital is one of the top five aircraft lessors globally, with a fleet of 734 owned, managed and committed aircraft, as of June 30 2021. Its shareholders are Sumitomo Mitsui Financial Group and Sumitomo Corporation.