How Basel III will change business jet finance

Basel III will fundamentally change banking.

This will include the financing of business jets and helicopters. As finance is a critical component of both new aircraft and pre-owned aircraft sales it will affect all of the corporate aviation industry.

The new regulations will come into effect in 2013 and 2014.

Key findings from our 26 page research report include:

• Basel III will increase the cost of all debt including aircraft finance transactions;

• Banks have known about Basel III for more than three years and bank appetite for business jet and helicopter deals has not fallen;

• We do not expect any business jet or helicopter lenders to exit because of Basel III;

• Loans to weaker credits and operators will become significantly more expensive and harder to find;

• The need for data on aircraft loans makes it harder for banks to enter the market as pure asset lenders;
• Many banks are focusing on growing private banking relationships so these banks will become even more important lenders;
• Increased regulation of banks is an opportunity for funds like Guggenheim Business Aircraft Investments, Milestone Aviation Group (helicopters);
• Basel III may encourage new sources of finance into the market, including insurance companies, pension funds and the use of more export credit guaranteed loans.

This is an extract from Corporate Jet Investor’s 26 page report on Basel III and business aviation. Members have full access to the report and can download it here.

Non-members can purchase the report for £100 by clicking here.

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