Dubai’s Novus starts new aviation debt fund

Novus Aviation Capital, one of the world’s fastest-growing aircraft leasing financing platforms, together with Development Bank of Japan, Germany’s Nord/LB and Boeing, launched a junior debt fund for airlines and lessors.

“With continued traffic growth and aircraft prices on an upward trajectory, coupled with the importance of preserving cash for airlines and lessors alike, this new venture is expected to be a popular financing tool,” said Hani Kuzbari, managing director at Novus.

The Cedar Aviation Finance (Caf) fund will provide airlines and lessors with higher loan-to-value financing for Boeing aircraft. It will be managed by Novus and will provide junior and mezzanine loans to bridge the gap between equity and senior debt for aircraft acquisitions. The companies said Caf’s first transaction is expected by the end of the third quarter.

As oil prices have rebounded, the International Air Transport Association cut its forecast for total profits for the global airline sector in 2018 by 12 per cent in June.

“If you want something new, you have to stop doing something old. And we evolved our business model,” said Oliver Gruenke, managing director and head of origination for aircraft finance at Nord/LB.

“[The fund] has been tailored to create, provide and preserve value for airlines and lessors.”

Caf is the third such fund for Novus. The financier has two other junior debt funds for the financing of Airbus aircraft.