Implications for aviation finance post-Brexit

Implications for aviation finance post-Brexit

Paul Holland, partner at Dentons examines the implications of the UK’s decision to leave the EU on the aviation finance market and what impact it could have on existing deals and cross-border arrangements.

Has the UK’s vote in favour of Brexit had any immediate impact on the aviation finance market?

In general finance, the markets are open and liquidity and prices have not been affected. There is a degree of uncertainty around the floor in other practice areas and certain deals are on hold but in the aircraft finance market I’m not aware of any issues that are stopping deals happening and even within the used aircraft market, we are closing deals.

There is an issue with the export credit agencies at the moment but this predates Brexit—the European export credit agencies are closed for business for aircraft finance and that is a far bigger issue in the market than Brexit.

What do you think will be the long term effects on such funding (eg potential impact on pricing/availability etc)?

Again I can’t see any. The asset class is probably the most international asset class you can possibly have unlike, for example, real estate which is built on and tied to a particular jurisdiction. Aircraft are unique security in the sense that they fly all around the world and the engines are often separated from the airframe and so it is a very complicated form of financing. As a result, it attracts a lot of international finance and so the fact that the UK will be coming out of the EU in two years’ time has a small impact on the global international aircraft finance market.

I don’t think there is going to be any currency impact either. The whole aircraft market is dollar denominated, even Airbus aircraft are sold in dollars. We are very internationally focused—we are normally financing Asia or Middle Eastern ai

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About the author:

Meet Neil:

1. Banking and finance lawyer with particular experience in asset finance

2. Likes Wales, wine, sport and anything else that means he doesn’t have the time to have to write personal information about himself

3. Thinks the law is a far broader topic than any of his family and friends who do not work in law

Neil specialises in banking and asset finance transactions with a particular emphasis in finance for shipping, aviation and renewable energy, as well as providing corporate transactional support. He trained and qualified at TLT LLP and spent a further four years working as a finance solicitor, acting for borrowers and lenders before joining the Asset Finance team at DLA Piper (UK) LLP.