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ILFC Unit Repays $2 Billion Loan

Source: WSJ

Posted on 11 Oct 2010

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International Lease Finance Corp., American International Group Inc.'s (AIG) aircraft-leasing arm, has repaid a $2 billion bank loan as the companies continue to recover from the financial crisis.

The bank loan was issued as a revolving line of credit and was fully drawn in September 2008, ILFC said Thursday. Since then, the business has generated $12.5 billion in liquidity through debt issuance and extensions and aircraft sales.

"These funds were borrowed at a time when ILFC was facing uncertainty in the financing markets," ILFC Chief Financial Officer Fred Cromer said. "Now that we are in a much stronger liquidity position we are paying this maturity with cash on hand."

As of March 31, ILFC had $32.3 billion in debt, according to the most recent 10Q filing available. A company spokesman said ILFC has made other payments and borrowings since that filing was made.

In August, ILFC repaid loans totaling $3.9 billion from the Federal Reserve Bank of New York. Earlier this year, the unit was able to raise funds on its own by obtaining loans and issuing bonds for the first time since AIG's bailout in 2008. AIG has said it doesn't expect to provide financial support to ILFC beyond February.

Aircraft-leasing companies, expected to own a growing share of the world's commercial fleet, are tapping the capital markets for financing. Before the financial crisis, the industry's major players were typically funded by their parent companies, often financial institutions using triple-A credit ratings to access cheap short-term financing.