Castlelake is to provide up to $5 billion of funding to finance Boeing deliveries under a new partnership agreement with the US OEM which will see the lessor move into debt financing.
Under the deal with Boeing and its subsidiary Boeing Capital Corporation, the US lessor will provide capital for new commercial aircraft deliveries via senior secured financing, mezzanine financing and high loan-to-value finance leases.
Castlelake will have "full discretion" over which transactions to pursue and the terms of those transactions. The term of the partnership is through 31 December, 2022, and can be extended for an additional two years.
"We are excited to work with Boeing to provide efficient, tailored financing solutions to their customers while also providing us with an excellent investment opportunity," said Evan Carruthers, chief investment officer and co-founder of Castlelake.
"We believe aviation will continue to be vital to our global economy and we look forward to expanding our longstanding relationship with Boeing and its customers to navigate the current environment," he adds.
"Boeing Capital's strategy has always been and remains to ensure that a range of efficient financing solutions are available for customers who purchase our products," said Tim Myers, president of Boeing Capital Corporation.
"We have known and worked with the team members at Castlelake for 15 years and are pleased to be able to partner with them on this important program. As the entire industry navigates through the global pandemic, partnerships like these are important steps to supporting stability and positioning for the opportunities ahead," he added.
The financing partnership comes as Castlelake expands its aviation investment strategy further into aviation lending.
The US lessor established a lending programme in mid November led by Armin Rothauser, who has more than 20 years of experience in credit, lending and hard assets.
The partnership comes after PIMCO and GECAS announced their intention to establish a $3 billion aviation leasing platform.
GECAS will source transactions for the platform, act as servicer and provide asset management services for the platform, while PIMCO will provide the capital.