{"id":1368175,"date":"2022-03-10T08:07:18","date_gmt":"2022-03-10T13:07:18","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1368175"},"modified":"2022-03-10T08:12:11","modified_gmt":"2022-03-10T13:12:11","slug":"russia-roils-plane-backed-bonds-by-keeping-jets-worth-about-10-billion","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/russia-roils-plane-backed-bonds-by-keeping-jets-worth-about-10-billion\/","title":{"rendered":"Russia Roils Plane-Backed Bonds by Keeping Jets Worth About $10 Billion"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Frussia-roils-plane-backed-bonds-by-keeping-jets-worth-about-10-billion%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1368175&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div><\/div>\n<p>(Bloomberg) \u2014 Russia\u2019s decision to block foreign owners from seizing hundreds of planes worth about $10 billion is roiling a market where aircraft leases are bundled into bonds and sold to investors.<\/p>\n<p>Most Read from Bloomberg<\/p>\n<p>European Union sanctions imposed on Russia because of its Ukraine invasion give plane owners until March 28 to retrieve the vehicles. But only a handful have been extracted, and hopes for more are dim.<\/p>\n<p>And so some asset-backed securities in the aviation space are coming under duress as a result. Although these types of transactions are designed to survive cash flow problems at the airlines leasing the planes, fully losing access to planes under these circumstances almost guarantees that lease payments that feed these ABS deals will soon dry up, with recourse uncertain.<\/p>\n<p>\u201cIt will be interesting to watch, as potentially the bottom capital structure could start to see losses,\u201d said Jennifer Thomas, portfolio manager at Loomis, Sayles &#038; Co.<\/p>\n<p>The situation has already had a chilling effect on over two dozen aircraft ABS deals that are exposed to the region, with investors fearing some tranches within those deals might take losses. Among the ones most exposed are two from Carlyle Aviation \u2014 one with 44% and another with 37% of lease payments tied to Russia or Ukraine \u2014 and two others from Castlelake Aviation.<\/p>\n<p>Kroll Bond Ratings is evaluating whether to downgrade nine deals, worth roughly $2.9 billion in total, including the Carlyle and Castlelake ones.<\/p>\n<p>Moody\u2019s Investors Service has done the same to one Castlelake ABS. According to a March 7 note from the credit rater, the deal will see reduced cash flow due to \u201cforegone lease income tied to early lease terminations and increased transaction costs stemming from potentially prolonged repossession and remarketing timelines associated with the aircraft on lease to Russian airlines.\u201d<\/p>\n<p>Read more: Nine Aircraft ABS on Watch Due to Russia\u2019s War in Ukraine: KBRA<\/p>\n<p>Some deals have already moved frantically in the secondary market. A refinancing of a Castlelake aircraft-lease asset-backed bond originally issued in 2017 plunged in value in early March after the Russian invasion, losing 17 cents on the dollar in a single day, according to Empirasign.<\/p>\n<p>The bond, known as CLAST 2017-1R, tranche B, was marked as high as 99.8 cents on Dec. 31 and plummeted to about 82 cents on March 1, Empirasign said. It\u2019s currently at 83.25 cents. The ABS has about a 20% exposure to Russia, according to S&#038;P.<\/p>\n<p>Read more: Russia-Exposed Castlelake Aircraft ABS Fell in Trading<\/p>\n<p>Investors are trying to get insurers to pay for losses, but that could be an uphill battle. By Feb. 26, EU-based insurers and reinsurers were required to stop providing coverage of planes to Russia-based airlines, while in Ukraine, some insurers have already withdrawn their coverage for aircraft leased and located in the country despite a lack of sanctions.<\/p>\n<p>Although lessors have their own insurance policies, insurers may find a way to not pay them back, Moody\u2019s said. \u201cInsurers may take steps to unilaterally cancel some policies, subject to required notice periods, before lessors incur losses, which could limit lessors\u2019 recoveries and add to potential future loss in the transactions.\u201d<\/p>\n<p>Elsewhere in credit markets:<\/p>\n<p>Americas<\/p>\n<p>At least five of the eight companies looking to issue new U.S. investment-grade debt opted to stand down Tuesday ahead of the U.S. decision to ban Russian energy imports.<\/p>\n<ul class=\"caas-list caas-list-bullet\">\n<li>\n<p>Three utility companies including Southern California Gas Co. opted to move forward with deals despite market volatility<\/p>\n<\/li>\n<li>\n<p>Investor calls are set to wrap up Tuesday for AT&#038;T Inc.\u2019s potential deal, which could total around $30 billion and be announced this week, according to a person familiar with the matter<\/p>\n<\/li>\n<li>\n<p>The Credit Derivatives Determinations Committee will meet on Wednesday to consider whether an alternative payment option in some of Russia\u2019s sovereign bonds would result in a failure to satisfy the currency rules for credit-default swaps<\/p>\n<\/li>\n<li>\n<p>Tegna Inc., a television broadcaster, is planning to borrow around $6.8 billion in the junk bond and leveraged loan markets to help fund its buyout by Standard General LP, according to sources with knowledge of the matter<\/p>\n<\/li>\n<li>\n<p>For deal updates, click here for the New Issue Monitor<\/p>\n<\/li>\n<li>\n<p>For more, click here for the Credit Daybook Americas<\/p>\n<\/li>\n<\/ul>\n<p>EMEA<\/p>\n<p>Commodities trading houses are being forced to seek additional financing as Russia\u2019s invasion of Ukraine sends prices soaring, stretching credit limits at the companies that buy and sell the world\u2019s resources.<\/p>\n<ul class=\"caas-list caas-list-bullet\">\n<li>\n<p>Norway-based DNB Asset Management SA held off from executing sale orders in a high-yield bond fund last week after investor demand for withdrawals exceeded agreed limits<\/p>\n<\/li>\n<li>\n<p>Bank of America cut its CLO refi\/reset forecast for 2022 to 19 billion euros, down from 35 billion euros, citing the war in Ukraine, increases in both core and headline Eurozone inflation, concerns over economic growth, rates volatility and the ECB\u2019s more hawkish tone<\/p>\n<\/li>\n<\/ul>\n<p>Asia<\/p>\n<p>Only two Chinese borrowers sought to price offerings on Tuesday, with borrowers on the sidelines of Asia\u2019s primary dollar bond market amid record gains in commodity prices.<\/p>\n<ul class=\"caas-list caas-list-bullet\">\n<li>\n<p>Chinese industrial companies\u2019 dollar bonds fell Tuesday<\/p>\n<\/li>\n<li>\n<p>Yuzhou Group Holdings Co.\u2019s dollar bonds fell to fresh record lows following a missed interest payment, as credit stress for Chinese developers remains high<\/p>\n<\/li>\n<li>\n<p>China Evergrande Group\u2019s main onshore unit has had its shareholding in a Chengdu subsidiary frozen for three years by a local court<\/p>\n<\/li>\n<li>\n<p>Logan Group Co. proposed to delay repaying the principal of a domestic bond by 18 months, according to a paper<\/p>\n<\/li>\n<li>\n<p>Prime Minister Narendra Modi\u2019s plan for India to build 25,000 kilometers of highway in the fiscal year starting next month is making the local currency bond market busy<\/p>\n<\/li>\n<\/ul>\n<p>Most Read from Bloomberg Businessweek<\/p>\n<p>\u00a92022 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Bloomberg) \u2014 Russia\u2019s decision to block foreign owners from seizing hundreds of planes worth about $10 billion is roiling a market where aircraft leases are bundled into bonds and sold<\/p>\n","protected":false},"author":1,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1368175","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1368175","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1368175"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1368175\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1368175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1368175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1368175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}