American International Group, the insurer declared to sell 90% stake of its plane leasing unit to New china Trust Co.
The investors associated with it in the deal are new china life insurance Co, P3 investment Ltd, ICBC international and china aviation Industrial fund. The deal is finalized at about $5.5 billion, which is a boom for American International Group’s international lease finance Corporation.
In 2007, china investment Corp purchased $3 billion of The Blackstone Group L.P.’s stake. That was the biggest deal in the history of china. Now this acquisition broke all the past records of Chinese acquisition.
ILFC, the largest aircraft lessor in china a U.S based company own 30% market share and 175 aircraft leased to 16 Chinese airlines.
ILFC, as per its nature of the business requires financial leverage and American International Group, tries to reduce the same.
The Credit Swaps:
AIG rose up by 3.7%. Its stock went up by 2% to $33.9%. Sugesting for a higher investors confidence, its credit swap for protection against losses on debt declined.
To repay a bailout of $ 182.3 billion, in 2009 American International Group,planned to sell ILFC went for a public offering unit, but in 2008 it is close to collapse in spite of a $60 billion asset help.
ILFC was acquired by American International Group, in the early in 1990. According to a recent quarterly report published in September it had 918 aircraft amounting to $34.9 billion along with more than 200 firm orders of aircraft including Airbus SAS’s new A320neo and Boeing Co’s 787.
Mr. Robert Benmosche, the Chief Executive Officer of American International Group, declared ILFC as a non-core asset and cleared that any activity involving ILFC, is subject to need the approval of U.S and China.
ILFC credit swap is down to 119 basis points to 270.8 basis points.
A basis point equals $1000 for the protection of $10 million debt annually.
Aircraft delivery financing will increase to $ 104 billion in 2013 from $95 billion this year and a further rise is expected to 132 billion in 2017, as said by Kostya Zolotusky, Boein Capital Market’s managing director.