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In EETCs we trust
01 November 2007
The enhanced equipment trust certificate is enjoying a good spell of popularity in the US. Sophie Segal finds out why.
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EETCs
capital markets
Bankruptcy is not usually a word that entices investors or banks, but most US airlines that have emerged from Chapter 11 in the past two years have issued enhanced equipment trust certificates (EETC), with fairly attractive returns attached.
As the market gains momentum, it is worth noting what has changed in the past two years to make the EETC an attractive financing tool.
After the September 11 2001 terrorist attacks on the US, EETCs were largely avoided as a means of financing aircraft in the fleets of US airlines. This was largely because of a slim investor appetite for airline paper. Now there is some semblance among the major structuring agents and bookrunners that the EETC renaissance is because airlines are taking delivery of new aircraft and they need to diversify the way they are financing their fleets.
EETCs appear to have performed relatively well in 2007. Cecilia Park, executive...
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