December 2009
Sky Holding Co; (Ex Pegasus) & Oaktree Capital Management (Aaron Bendikson) announced a new partnership that will provide capital to airlines around the world.
Sky funding: $500M investment from funds managed by Oaktree and will enable Sky to finance over $2B in aircraft annually.
Rich Wiley, Sky's founder and CEO says Sky Holding Co; sale/leaseback trading will begin in Q1 of 2010.
Sky Holdings & Oaktree between them executed on over $6B in aircraft transactions between 2004 and 2007.
Sky (Rich Wiley is Sky's founder and CEO) is a full-service aircraft leasing company based in San Francisco with offices in Seattle, Miami, and Buenos Aires. A European office will open in 2010.
Sky’s team, which had previously worked together at Pegasus Aviation, has over 90 years of combined industry experience.
Sky’s team, collectively acquired over $10B of aircraft, purchased and/or remarketed over 400 aircraft, and had relationships with 30 l lenders and investment banks.
Oaktree is a premier global alternative and non-traditional investment manager with over $67B billion in assets under management.
Oaktree was founded in 1995 by a group of principals who have worked together since the mid-1980s.
Hedge Funds $2 trillion capacity Battered
by Credit Freeze
As the fortunes of the aircraft trading industry dived following 9/11, highly leveraged headge fund and investment firms moved in to pick up high quality assets at very attractive prices. These funds were flush with private equity and leveraged debt provided by investment banks in the USA and Europe. They made money when the aircraft trading market went down and they made it as the market recovered. The industry was grateful for their participation which helped improve aircraft values.
The $2 trillion hedge fund sector has fallen on hard times and is now reporting losses for only the second time in ten years. More than 100 hedge funds are reported to be on credit watch and 50 to 80 of these are expected to fail before the endof the year. The flow of new money into hedge funs has slowed from $118 billion in the first half of 2007 to $30 billion in the same period in 2008. On average hedge funds have reported 4 percent losses through September 2008. More and more, hedgef funds are finding it harder to borrow money from investment banks because Solomom Smith Barney and Lehman Brothers have gone out of business. Goldman Sachs and Morgan Stanley are converting to a holding bank regulatstat, a key source of funding for new projects. Where funding is available, the cost is higher and the term shorter. The big issue for their investors; public and corporate pension funds, university endowments and insurance companies, is that the returns on the billions of dollars they have invested are falling as financial markets struggle. If returns are low investors will demand that managers take lower fees. A typical hedge fund earns a 2 percent annual fee plus 20 percent of profits.
So far hege funds have been reporting weaker returns in sectors such as stock and bond trading, mergers and acquisitions, and oil trading. As more airlines fail in the coming months the aircraft trading and financing market may have to pay a heavy price.
AIG could sell ILFC!
DOW Jones reported that shares of American International Group Inc. (AIG) continued to fall through September 2008 because of concerns about the company's ability to raise capital. AIG lost $13.2 billion in the first half of 2008.
In mid-September 2008 AIG recorded its lowest share price in more than 20 years and the company's market value fell to $39 billion.
Quoting CreditSights analyst Kathleen Shanley DOW Jonesreported that : "AIG may need to raise capital (either by selling assets or finding new investors) in order to stave off ratings agency downgrades. The U.S. subsequently took controll of AIG.
DOW Jones reports that AIG may sell or spin off parts of its business to raise money. Leading shareholders are reported to be conducting a review of the businesses. The need for capital comes as losses from AIG's huge portfolio of securities backed by subprime mortgages appear likely to generate more losses in the third quarter, while its mortgage insurance and lending businesses also are suffering.
Source: Dow Jones Newswires.
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