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DUBLIN - AerCap Holdings N.V., a global leader in aviation leasing, has announced the pricing of a $750 million offering of junior subordinated notes due in 2055, with an initial interest rate of 6.95%. The interest rate is scheduled to reset on March 10, 2030, and every five years thereafter, based on the prevailing five-year U.S. Treasury rate plus a spread of 2.72%.
The offering, managed by J.P. Morgan, Mizuho, Goldman Sachs & Co. LLC, and Santander (BME:SAN) as joint book-running managers, is part of the company's proactive capital management strategy. The notes will be fully and unconditionally guaranteed by AerCap and certain of its subsidiaries on a junior subordinated basis.
AerCap intends to use the net proceeds from the notes for general corporate purposes, which may include the redemption of its outstanding junior subordinated notes due in 2079 on their first call date, October 10, 2024. However, this press release does not serve as a notice of redemption for those notes.
The offering is made under a registration statement filed with the U.S. Securities and Exchange Commission (SEC), which became effective on October 19, 2021. Investors have been advised to read the accompanying prospectus and other relevant documents filed with the SEC for more complete information about AerCap and this offering.
AerCap is renowned for its attractive order book and serves approximately 300 customers worldwide with comprehensive fleet solutions. The company is listed on the New York Stock Exchange under the ticker symbol NYSE:AER and maintains a significant presence in the global aviation industry with offices across various continents.
In other recent news, AerCap Holdings is embroiled in a significant legal dispute in Dublin over approximately $2.7 billion in insurance claims related to aircraft stranded in Russia due to sanctions. The company is among several major aircraft lessors, including SMBC, Avolon, BOC Aviation, CDB Aviation, Nordic Aviation Capital, and Hermes Aircraft, seeking to recover losses from insurers such as Lloyd's of London, NYSE:CB, and Fidelis. The trial, which is expected to continue until June, is the largest case ever heard in Ireland in terms of legal representation.
AerCap Holdings has also recently expanded its cargo fleet through a lease agreement with JD (NASDAQ:JD) Airlines for four Boeing (NYSE:BA) 737-800 Converted Freighter aircraft, set for delivery in 2024. This move is expected to bolster JD Airlines' cargo capacity in China and across Asia. Furthermore, recent earnings results showed a 40% increase in AerCap's adjusted earnings per share, reaching $3.29, and adjusted net income hitting $658 million in Q1 2024.
In terms of analyst coverage, Morgan Stanley initiated coverage on AerCap, assigning an Equalweight rating and setting a price target of $103.00. Additionally, TD Cowen and Citi have maintained their Buy ratings on AerCap, with TD Cowen raising its price target to $125 and Citi to $103.00. These recent developments highlight AerCap's ongoing activities in the aircraft leasing industry.
InvestingPro Insights
AerCap Holdings N.V. (NYSE:AER), while navigating the complexities of the aviation leasing industry, has demonstrated notable financial metrics that may interest investors. According to InvestingPro data, AerCap boasts an impressive gross profit margin of 58.81% for the last twelve months as of Q1 2024. This robust margin underlines the company's ability to manage costs effectively and underscores its profitability in a competitive sector.
The company's proactive approach to capital management is further evidenced by its P/E Ratio, which stands at a low 6.02. This indicates that AerCap's shares might be trading at a lower price relative to its earnings, potentially offering an attractive entry point for value investors. Additionally, AerCap's management has been aggressively buying back shares, as highlighted in one of the InvestingPro Tips, suggesting confidence in the company's future prospects and a commitment to enhancing shareholder value.
Investors should also note that AerCap's stock has experienced a large price uptick over the last six months, with a 28.0% total return, reflecting positive market sentiment. For those looking to delve deeper into AerCap's financials and future outlook, InvestingPro offers a range of additional tips, including insights on the company's debt burden and revenue valuation multiple. With the use of the exclusive coupon code PRONEWS24, investors can access these valuable tips and receive up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
For comprehensive analysis and further InvestingPro Tips related to AerCap's financial health and stock performance, interested readers can visit https://www.investing.com/pro/AER. There are 12 additional tips available, providing a deeper dive into the company's strategic moves and market position.
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