Aircraft lessor Air Lease Corp (NYSE:AL) will sell a new preferred stock offering of fixed-to-floating rate preferred stock.
AL has aircraft with current book values of about $16 billion being leased to airlines across the globe.
While aircraft leasing can be a lucrative business when global economies are strong it can be the inverse if we go into a global recession and airlines begin to experience pressure on their revenues and balance sheets. As with many similar types of businesses Air Lease is highly leveraged–they carry debt of almost $12 billion against equity of $5 billion.
The company currently pays a 13 cent/share quarterly dividend.
This issue will be non-cumulative, but should be qualified for preferential tax treatment. The rate will be fixed until 2024 after which it will float with a 3 month Libor spread.