Apollo Global Management is set to favor aircraft financing over high-yield bonds for a £3.5 billion debt package backing its acquisition of EasyJet Plc. Barclays, Credit Agricole, Citibank, Standard Chartered Bank and Lloyds initially provided an underwritten bridge financing to back the buyout. A number of other banks subsequently participated in the interim bridge financing, which comprises a £3.5 billion senior secured note bridge facility and a £1.3 billion revolving credit facility.
Those banks are now looking to put longer term debt in place, according to people familiar with the matter. Apollo will look to raise the majority, if not all, of the debt via asset-backed financing in the market for loans and other debt secured against aircraft, though it could also mix the two sources of funding. Initially, Apollo had looked to raise £900 million of euro floating rate notes and £2.6 billion of sterling, euro and dollar denominated senior secured notes.
But the high yield market has weakened as surging government bond yields drive up corporate borrowing costs, making alternative financing cheaper and more attractive. Apollo agreed to buy EasyJet in August, following months of wooing the carrier in a bidding war. The US asset manager will gain control of an airline that helped pioneer ultra low-cost travel in Europe and owns assets including a fleet of Airbus SE A320-type jets, landing slots at constrained airports in London, Milan and Geneva, and a vacation packages business.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing