Most OEMs have strong backlogs and should see improvements in supply-chain challenges that have limited deliveries in 2022 and so far in 2023; so says the latest report from aircraft finance experts Global Jet Capital. Pre-owned transactions continue to return to rates more in line with historical trends and are expected to pick up in 2024 and beyond to reflect increasing demand from new aircraft models.
“As expected, we have seen a leveling off from the unprecedented demand that our industry experienced post-pandemic, but looking ahead we see a steady growth pattern for both new and pre-owned aircraft,” says Andrew Farrant, chief marketing officer.
Based on its econometric top-down model, Global Jet Capital projects $195 billion in total transaction volume of new and pre-owned transactions between 2023 and 2027, with a compound annual growth rate of 3.1 per cent during that time.
In its annual Business Jet Market Forecast, GJC projects continued growth for the next five years. The forecast also contains insights and projections for the business aviation market through 2027, including breakdowns of new deliveries and pre-owned transactions. The high level of detail in the report is based on outputs generated by the company's proprietary transaction forecast model. The Market Forecast can be downloaded from the Global Jet Capital web site.
In the report, the company forecasts that deliveries of all size categories will increase during the period, but heavy long-range jet demand should increase at faster rates than other sizes as demand favours more international travel. North America is expected to remain the largest business jet market over the next five years, with Europe remaining the second largest market. Latin America is also forecasted to continue its important pre-owned market interest.
Meanwhile Global Jet Captial reports that Standard and Poor's (S&P) Global Ratings has upgraded its ratings on several tranches of BJETS 2020-1 and BJETS 2021-1 ABS notes. In the case of BJETS-2020-1, Class B notes were upgraded to A- from BBB and Class C notes were upgraded from BB to BBB+, while the Class A notes maintained their A rating. Regarding BJETS 2021-1, Class B notes were upgraded to BBB+ from BBB and Class C notes were upgraded from BB to BBB-, while the Class A notes maintained their A rating. Per SandP's existing risk criteria, A is the highest achievable rating for notes issued in business jet transactions.
The notes issued in the BJETS 2022-1 transaction maintained their existing ratings of A for Class A notes, BBB for Class B notes and BB for Class C notes.
According to S&P, the upgrades primarily reflect the significant increase in the respective notes' credit enhancement due to faster-than-expected principal repayments, strong collateral collections and sustained stable portfolio performance since closing.
Global Jet Capital, a global leader in financial solutions for business aircraft, originated and services the securitised loans and leases embedded in its ABS transactions.
“We are pleased to see the diversification and stability in our portfolio being recognised by S&P,” states Vivek Kaushal, Global Jet Capital's chief executive officer. “We are grateful to our investors and SandP for recognising and rewarding this ongoing strong performance.”
Global Jet Capital has issued an aggregate of $3.6 billion of ABS notes collateralised by business aircraft loans and leases through its BJETS securitisation programme. The company is a programmatic issuer in the ABS market, having completed six transactions since its inaugural issuance in 2018. Global Capital awarded BJETS 2020-1, the first aviation ABS to come to market following the start of the COVID pandemic, “ABS Deal of The Year” in its 2021 US Securitization Awards.