By Paul A. Harris
Portland, Ore., June 12 - Synergy Group Corp., majority owner of Latin American aviation group Avianca, has priced a $121 million B tranche of pre-delivery payment financing participations (PDPs) at par to yield 6½%, according to an informed source.
The deal is expected to come with a low double B or high single B rating from Standard & Poor's and a level 3 rating from the National Association of Insurance Commissioners.
Global Hunter Securities was the placement agent.
The B tranche saw participation from high-yield accounts and leveraged loan accounts including mutual funds, insurance funds and hedge funds, the source said.
The offering was part of a total $263 million debt capital markets transaction in multiple tranches to provide financing for eight Airbus A330 aircraft.
Synergy Group is a South American conglomerate based in Rio de Janeiro.
Synergy Aerospace operates Avianca throughout South America with main operations in Columbia, El Salvador, Lima and Brazil.
The group also explores for oil throughout the region, operates ship building facilities and operates hotels. It operates hydroelectric power plants, participates in the construction of telecommunications infrastructure, radiochemistry, radiopharmaceuticals, agriculture and hospitality.
First PDPs in U.S. market
Global Hunter said that the PDP transaction is the first-ever debt capital market transaction of its kind to be run by an American institution.
Pre-delivery payments are stage payments that are payable by the purchaser to the manufacturer under an aircraft purchase contract over a period of years before delivery of the aircraft, and they can account for a substantial portion of the total aircraft purchase price, the source said.
Airlines view them as a way to enhance liquidity during the aircraft production cycle. Bankers view them as a way to get short-term exposure to aviation assets and deepen relationships. Manufacturers view them as a way to facilitate sales.
The aircraft will operate in the group's expanding network in Central and South America, the United States and Europe.
"We are proud to complete this highly innovative financing providing a solution for the needs of our clients," said Jonathan Blatt, co-head of debt capital markets at Global Hunter.
Matt Gourlay, Blatt's partner at Global Hunter, said, "The PDP financing market had traditionally been the domain of the European bank community. Hence providing a U.S.-based capital markets solution portends favorably for the financing needs of the $100 billion aircraft finance market."
An investment-grade A tranche of the participations was led by Natixis.
| Issuer: | Synergy Group Corp.
|
| Amount: | $121 million
|
| Maturity: | September 2015
|
| Average life: | 1.5 years
|
| Security description: | Tranche B pre-delivery payment financing participations
|
| Placement agent: | Global Hunter Securities
|
| Coupon: | 6½%
|
| Price: | Par
|
| Yield: | 6½%
|
| Settlement date: | June 11
|
| Ratings: | Expected to be rated by NAIC and Standard & Poor's
|
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