Investing in Junk Bond Leasing Companies

The INTERNATIONAL LEASE FINANCE CORPORATION (ILFC) team develops, negotiates, executes, and closes complex transactions from traditional operating leases and fleet renewals to structured financings. Driven by operating and cost efficiencies, many airlines acquire new aircraft through leasing rather than shoulder the burden of direct purchase. Increasingly, as airlines consolidate, grow larger and focus on core competencies, there has been an ever-deepening trend toward leasing, even within the world’s largest airlines. In the near future, ILFC expects that half the world fleet will be leased.

With a diverse portfolio approaching one thousand modern Boeing and Airbus jet aircraft, ILFC is uniquely positioned to address the growing demand for aircraft leasing by offering the most cost-effective and flexible options in the business. Among the world's largest airline lesser with 500 or more aircraft in their fleets, ILFC is distinguished by its ownership of one of the youngest, most advanced leasing fleets in the world.

It is safer to buy the bonds of this leasing company than to buy airline stocks or stock in finance companies. Speculators can make more money in stocks but I rather make it slowly with bonds. This is why I have the following bond in my portfolio.

INTERNATIONAL LEASE FIN CORP 6.20000% 04/15/2014 FR
Has a S&P Rating of BB+, sold on March 3, 2011 for $988.36.

This means if you would buy the bond and settled your transaction on April 15, 2011, you would make the following by maturity day on April 15, 2014;

Your bond appreciation would be $1,000 minus 988.36 or $11.64.
But your interest would be 3 years times $62.00 or $186.
Your appreciation plus your interest equals $197.64.

Over three years; you would make $197.64 on a $988.36 investment. That is a total return of 20% over three years or 6.67% per year.

Did the Japanese Multi Disasters’ Bomb Darnell’s Portfolio?

On the close of Thursday March 17, 2011, it looked like the Japanese calamity was going to take the world’s stock, commodity, and bond markets straight into the toilet. In my opinion, as long as this series of disasters is not repeated, the worlds markets will recover rather quickly.

As of the close on Thursday, the Dow was up “Year to Date” only 1.70%. It did recover from a negative number earlier in the week. My portfolio is design to with stand a major bear market. A small correction does very little to affect my investments. My portfolio is up 2.44% “year to date.” When you add in my yearly contribution to my IRA, it is up 9.20%, “year to date” and 94.85% since the end of January 2009.

Let me warn you!

I do see a danger. The Libyan problem is totally out of hand. The west is driven by the need to keep the oil tap running. There is a true uprising against the leadership in the Arab and Muslim world. I would not be rejoicing about all this if I lived in the West. You take out the leadership in the Arab world and then you have to think about who will replace it.

Remember, before World War I we had the Kiser leading Germany, a Czar leading Russia, and a Hapsburg family leading the Austrian-Hungarian Empire. After World War I everything was changed. The new European Leaders went right into rearming and fighting World War II. This re-alignment in the Arab and Muslim World might lead us right into World War III. This time, no Atlantic Ocean will protect the United States this time. Everyone has access to missiles, bombers, and bombs. Nuclear bombs, the size of suit cases are a reality. Many suicide killers would love to use them. So no one on Earth will be safe in the next World War.