To enhance the size as well as terms of its unsecured revolving credit facility, International Lease Finance Corporation (ILFC) – a part of the aircraft leasing wing of American International Group, Inc. (AIG - Analyst Report) – has replaced its old credit facility with a new $2.3 billion committed unsecured revolving credit facility. The credit facility will be used to borrow funds for general corporate needs of the company. ILFC had entered the old facility worth $2 billion in January 2011.
Ten major banks – Citibank of Citigroup Inc. (C - Analyst Report) , Bank of America Corp. (BAC - Analyst Report) , JPMorgan Chase & Co. (JPM - Analyst Report) , Barclays Bank of Barclays Plc (BCS - Analyst Report) , Morgan Stanley (MS - Analyst Report) , Royal Bank of Canada (RY - Snapshot Report) , Credit Suisse Group(CS - Snapshot Report) , Deutsche Bank AG (DB - Analyst Report) , The Goldman Sachs Group Inc. (GS - Analyst Report) and UBS AG (UBS - Analyst Report) – are involved in the new credit facility.
The participation of these major banks reveals their faith in the operating strength and substantial market share of ILFC. A vote of confidence from large banking corporations goes a long way in boosting the confidence of small investors as well. Apart from increasing the size of the company’s credit facility, the replacement will also boost its liquidity.
ILFC has a strong and diversified capital structure, which it continues to strengthen further by raising additional capital. The company has acquired about $6.4 billion of new capital to date this year. In the second quarter of 2012, ILFC raised approximately $753 million in secured debt to refinance its previous secured debt and to purchase aircraft. Moreover, management is considering an initial public offer of the company.
AIG will announce its third-quarter financial results after the closing bell on November 1, 2012. The company currently carries a Zacks #2 Rank, which translates into a short-term Buy rating. One of the factors which contribute to the Zacks Rank is the direction of revision of EPS estimate by firms. The third-quarter earnings estimates of AIG have been on the rise over the past 30 days. Of the 18 firms covering the stock, 12 revised their estimates upward in the past 30 days, while no downward revisions were witnessed.
The Zacks Consensus Estimate for the company’s third-quarter 2012 earnings is currently 81 cents per share, up about 151% year-over-year. For 2012, AIG’s earnings are expected to be $4.39 per share, climbing about 330% over last year’s level.
We maintain our long term ‘Neutral’ recommendation on the shares.