Esoteric

Blue Own Asset Leasing's notes benefit from a reserve account representing 1% of the pool balance, overcollateralization, and a senior-subordinate repayment structure.

The heavy issuance partly stems from banks offloading loans from their books ahead of new capital rules.

Local Law 79 affects roughly 15,000 commercial real estate buildings in New York City, a market ripe for securitization.

The notes receive credit enhancement from overcollateralization, and an initial reserve.

An independent valuation said that the total catalog is worth about $2.36 billion, based on projected cash flow from the assets. More than 70% of the songs were released more than 10 years ago.

The $120 million deal is larger than the inaugural transaction from 2023, and includes expandable notes, plus a 36-month revolving period.

Further, the assets have a loan-to-value ratio of about 52%, with a cashflow that can withstand large haircuts.

Sales of airplane leases bundled into bonds have climbed to more than $5 billion this year, from around $1 billion in 2022 and 2023.

All the notes, which are fixed rate, have an Aug. 18, 2031 final maturity date, DBRS said. The transaction will repay investors sequentially.

Credit enhancement on the notes includes 3.5% in excess spread, subordination of the class M notes equaling 3.%, and a liquidity reserve that will equal 0.45% of the closing PACE assets balance.