Investors are increasingly turning to high-grade bonds in a bid to secure long-term income streams as equity markets come under pressure. Investors have continued to shrug off the record low-interest rates, depicted by capital inflows into a number of high-grade bond offerings.
Airplane Leasing Bonds
Investors’ eyeing opportunities in the embattled airline industry, hard hit by the pandemic, have turned to aircraft leasing bonds in the recent past. Since the start of the year, leasing companies which own airplanes that are leased to airlines have raised a whopping $14.9 billion, from successful bond deals affirming strong demand in the market.
Aircraft leasing bonds have emerged as ideal investment vehicles given the attractive returns they guarantee in an industry struggling with lots of issues. This is partly because the aircraft leasing corner of the industry remains well protected against further fall out of the COVID-19 pandemic.
Most aircraft leasing companies sign long term lease agreements with airlines which allow them to straddle any difficult patches in the airline industry. While the biggest risk is airlines failing to pay rent, let alone going bankrupt, most of them have secured financings to service the COVID-19 shocks. Likewise, aircraft leasing companies remain well-positioned to pay out their bond offerings which explain their strong demand.
Booming Israeli Debt market
The Israeli bond market is another one that continues to attract big deals, as is the case in the aircraft leasing segment. Jared Kushner’s family is the latest to show strong interest in tapping the Israeli debt market in a bid to raise close to $100 million.
Kushner Cos, the family’s real estate company has already filed papers to sell bonds on the Tel Aviv stock exchange marking its first entry into Israel. The push comes on the heels of a number of U.S focused property firm also moving to raise capital in the Israeli debt market. Barry Sternlicht’s Starwood Capital Group, Extell Development, and Joel Wiener’s Pinnacle Group have targeted Israeli investors in recent months.
The Israeli debt market has always been friendly to New York developers, given its low borrowing costs over the years. However, in recent months U.S companies bonds have tumbled. The drop comes amid growing concerns about the U.S real estate sector in the aftermath of the pandemic.
Separately, Landsbankinn has completed the sale of senior unsecured floating rate bonds conversely raising SEK 900 million. The BBB bonds are poised to mature in 18 months and priced at a spread of 75bp over a 3-month LIBOR.
In addition, Fitch Ratings has confirmed the withdrawal of ratings to a number of U.S Municipal bond maturities. Some of the bonds affected include Franklin County (OH) (Trinity Health Credit Group) revenue bonds, California Statewide Communities Development Authority (Trinity Health Credit Group) revenue, and refunding bonds and Idaho Health Facilities Authority (ID) (Trinity Health Credit Group) revenue bonds.
The rating firm withdrew the ratings as the bonds were already prefunded