UPDATE 1-Tight credit spells trouble for aircraft makers-analyst
(Recasts; adds analyst comments)
Oct 20 (Reuters) - The availability of financing, mainly for new commercial aircraft, will dwindle in 2009 as lenders worldwide pull back amid a credit crisis, according to an analyst at J.P. Morgan Securities.
"We believe that leasing companies and banks, which represent about 60 percent of the aircraft finance market in 2008, are likely to pull back substantially, which could create a $10 billion to $20 billion funding gap," analyst Joseph Nadol wrote in a note to clients.
The costs of financing have risen significantly, particularly over the last several months, he said.
Nadol believes bank debt is an important slice of the aircraft financing pie. The credit turmoil and the weakened state of banks worldwide may reduce their participation in financing over at least the next couple of years, he said.
Even though export credit agencies, including the Export Import Bank in the United States, will step up financing, they are unlikely to be able to fill the entire funding gap, he said.
New financing sources could include sovereign funds and regional banks. "Middle Eastern and Asian sovereign wealth funds have shown an increasing interest in aircraft finance in recent years, and these players could increase their participation in 2009," Nadol said.
"We believe that regional banks such as those in China are likely to step up to provide financing for deliveries to local carriers."
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