Newswatch 14th March 2017
ISTAT US was a big affair this year. Key takeaways for IBA were:
- Pricing: There is some mismatch on aircraft pricing. Some say pricing of buying aircraft with leases attached from established lessors is too high. However, like many issues in our business the devil is in the detail. If the pricing means that the returns are high single digit rather than high double digits then that is still a good investment for somebody. The transactions that need to be very carefully analysed are those with unlikely return condition assumptions and unrealistically high expectations of residual.
- At some point the music stops and while the music stopping is potentially bad news for investors, it was seemingly good news for those who’d had enough of the ISTAT band.
- Uncertainty: Our market is more volatile/less easy to predict than a year ago. To be clear, the market is still very strong but, compared to 2015 and 2016, we are hearing a lot more defensive talk around risk mitigation and monitoring across the credit, the asset and the jurisdiction.
- New investors: Both from our trip to San Diego and from our recent trip to China, Korea and Japan there is little, if any, reduction in demand for dollar-denominated assets, be that new or mid-life kit.
Speaking of Korea, we will be back in Seoul next week at the AFJ conference – do come and say hello if you are in town.
Our next webinar will be on March 30th at 8.30am. In response to numerous requests we will be running an introductory session on aviation investments looking at the key stages – pre-investment, managing the assets and exit/end of life options. As ever we will record the slides and click here to register.
Finally, I enjoy discussing the future of appraisers with Dick Forsberg at Avolon, (IBA’s response here if you had missed it). Dick has published an excellent new whitepaper on China’s Aviation market, which I encourage you to read by clicking here.