Apollo Global Management is set to opt for aircraft financing rather than high yield bonds for a £3.5 billion debt package backing its acquisition of low-cost carrier EasyJet Plc.
Barclays, Credit Agricole, Citibank, Standard Chartered Bank and Lloyds initially provided an underwritten bridge financing to back the buyout. A number of other banks subsequently participated in the interim bridge financing, which comprises a £3.5 billion ($4.6 billion) senior secured note bridge facility and a £1.3 billion revolving credit facility.
Those banks are now looking to put longer term debt in place, according to people familiar with the matter who asked not to be identified because the talks are private. The sale is expected to launch toward the end of this year or early 2027, the people added.
Apollo will look to raise the majority, if not all, of the debt via asset-backed financing in the market for loans and other debt secured against aircraft, the people said, though it could also look to mix the two sources of funding, the people said.
Initially, the alternative asset manager had looked to raise £900 million of euro floating rate notes and £2.6 billion of sterling, euro and dollar denominated senior secured notes. But the high yield market has weakened of late as surging government bond yields drive up corporate borrowing costs. That has made alternative forms of financing cheaper and more attractive, the people said.
Spokespeople for Apollo, Credit Agricole and EasyJet declined to comment. Representatives of the rest of the banks didn’t immediately respond to requests for comment.
Apollo agreed to buy EasyJet in August, following months of wooing the carrier in a bidding war.
The US asset manager will be gaining control of an airline that helped pioneer ultra low-cost travel in Europe and owns many attractive assets, including a fleet of Airbus SE A320-type jets; landing slots at constrained airports in London, Milan and Geneva and a vacation packages business.