Issuer: Air Lease Corporation Sukuk
Size: $600 million
Structure: Sukuk
Tenor: Five years
Banks: Bank ABC, DIB, Al Rayan, Citi, Deutsche Bank, Emirates NBD, JPMorgan, KFH Capital and Warba Bank (joint lead managers)
Date: March 2023
After a 13-year hiatus, the global sukuk market finally saw its second sukuk from a North American corporate issuer last March, reigniting expectations that other issuers from the US and Canada could look to tap this form of Islamic finance.
The $600 million five-year sukuk from California-based Air Lease Corporation was not only its debut in the format, but the largest such transaction since GE Capital, the finance unit of US conglomerate General Electric, opened the international sukuk market for North American corporate issuers with a $500 million five-year deal in 2009.
While that deal was pioneering, Air Lease’s transaction is equally novel, especially given its size, scale and rating difference with GE Capital (rated AA/A2 by S&P Global and Moody’s in 2009), which at the time had $500 billion of assets and was designated a systemically important financial institution.
By comparison, Air Lease has total assets of $30 billion and is rated BBB/BBB/A- by S&P Global, Fitch Ratings and Kroll.
Nevertheless, the success of Air Lease’s London-listed sukuk, which attracted an orderbook more than 3.5 times subscribed, demonstrates there is still good depth in demand for US corporate issuers tapping this market.
While [the GE Capital] deal was pioneering, Air Lease’s transaction is equally novel, especially given its size, scale and rating difference
And with pricing of the Air Lease sukuk – 185 basis points over Treasuries – flat to its conventional curve, these two reasons alone might attract other US corporates to look at issuing sukuk for the first time.
It is for this, coupled with its pioneering quality, all round success and – and rarity – that Air Lease’s sukuk is Euromoney’s North American Islamic finance deal of the year.
Daniel Verwholt, senior vice-president and treasurer of Air Lease, said in a statement at the time of the deal that it had highlighted “the strong liquidity in this region and the opportunity for other investment-grade borrowers to raise funds at cost-efficient rates.”
Verwholt was referring to the Middle East and specifically the UAE, Qatar and Saudi Arabia, countries where the deal was roadshowed and generated strong interest.
The deal, structured as 144A/RegS transaction, was joint lead managed by Bank ABC, Dubai Islamic Bank, Al Rayan, Citi, Deutsche Bank, Emirates NBD, JPMorgan, KFH Capital and Warba Bank.
Air Lease said it used the proceeds for general corporate purposes, such as the purchase of commercial aircraft and the repayment of existing debt.
