Click here for winners:
Overall Deal of the Year, Most Innovative and Editor's Award
Asia, Asia-Pacific and Middle East Deals of the Year
European, North American, Regional Aircraft and Latin American Deals of the Year
Aircraft Trade, Aerospace and PDP Deals of the Year
The further you get from a traumatic event the less terrible it seems. Sitting in April 2010 it is already difficult to remember how grim things were at the start of 2009. The S&P 500 index, which had been at 1400 in August 2008, started 2009 at just 931 points, dipping to 890 in March. Only a year later, it is now at 1190.
Many banks were simply unable to extend long-term finance because they could not work out what their own short-term cost of debt was. Others pulled out of transport finance completely (although mainly as a result of other systemic problems or bad shipping loans rather than any problems with airfinance).
Probably the biggest surprise of the year was that aircraft continued to get financed. In early 2009 at the European Airfinance Conference in Dublin, many were preoccupied with how wide the funding gap would be. But, after the panic subsided, things slowly started improving. The export credit agencies stepped up. As one banker put it: "The world revolved around Bob Morin in 2009. He was the centre of the aircraft finance universe." Morin is executive vice president of transportation at US Export-Import Bank.
Then a miracle happened in North America. The US capital markets returned in the second half of the year: leading to over $10 billion of US airline capital market issuance.
As always, Airfinance Journal's awards recognise innovation, perseverance and deals that will be replicated. The biggest breakthrough came in October when Emirates went to market with its Ex-Im bond. GOL and Aviation Capital Group also closed Ex-Im bonds before the year-end with a total of 10 deals up to March 2010.
Although Ex-Im bonds were common in the 1980s and one deal, a former award winner, for South African Airways closed in 2007, the market has a new structure now, which brought pricing down and has again made Ex-Im loans affordable for borrowers.
Timing was also important in 2009. American Airlines' decision to close three deals in the space of two weeks was inspired and brave as was Delta's four deals. GE's sukuk, which was complex and innovative, was the result of 18 month's work and closed just before the Dubai World crisis occurred.
Another big theme in 2009 was the emergence of China as a sophisticated source of international capital. Four of the deals (Joint Asia Pacific, Europe and Aircraft Trade) show how China is emerging not just as an aviation borrower but also as lender. AerCap received a $358 million loan from China Development Bank, while the Industrial and Commercial Bank of China closed a landmark deal with its first domestic special purpose vehicle. Other Chinese banks are already in discussions to replicate the structure.
Any deal that closed in 2009 deserves credit, and the lenders who remain committed to their clients all deserve an honorable mention. While Airfinance Journal's Awards tend to recognise large innovative and landmark deals, we also appreciate how important particular lenders have been in making deals happen this year, such as like Barclays, BNP Paribas, Calyon, CIC, DVB, Helaba, Standard Chartered and others. They were prepared to lend money and deserve credit for using their balance sheets to fund aircraft in such a tough market.
Airfinance Journal is already receiving nominations for 2010 awards, even though we still have another eight months to go. And 2010 looks set to be another great year.
Whatever happens, at least we are not likely to see a repeat of the horrors of 2008 and 2009. And based on the deals that closed, perhaps it was not such a bad year after all.
Alasdair Whyte
Publisher
Airfinance Journal