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Feature: Pricing Survey

18 October 2011

Patrick Winters asks leading banks to indicate commercial debt and export credit margins for new narrowbody aircraft.

Tags: Eurozone  |  debt pricing  |  French banks  |  narrowbody  |  A320  |  737

Rising margins are back. After a calm first six months to the year during which spreads tightened, debt pricing has become volatile and uncertain in the second half of the year.

"There is no commercial debt market for aviation," says one European banker who asked not to be named.

Pricing is changing every week, because of a lack of dollar funding at the European banks. French banks, in particular, do not have deep access to long-term dollar debt, which is more costly.

"Many American money market funds have pulled out of Europe altogether due to the uncertainty around Greece and that makes dollar funding in particular more difficult," says Joerg Schirrmacher, head of aviation, Helaba. Schirrmacher adds that Helaba has had an easier ride than most European banks.

The shortage of US dollars, the currency by which aircraft are valued, is driving up the cost of aircraft financing. Banks began...

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