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Aircraft maintenance firm makes debut engine-lease ABS

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An independent passenger jet-engine leasing company is marketing its first-ever securitization backed by a pool the asset value of 29 engines on lease to 13 airlines.

Total Engine Asset Management (TEAM), a 50/50 joint venture of a Singapore-based STE Engineering and Japanese trading and investment firm Marubeni Corp., is sponsoring the transaction featuring $256.98 million across three series of notes.

STE Engineering is the world’s largest aircraft maintenance, repair and overhaul provider, according to Kroll Bond Rating Agency.

The tranches include a $214.15 million Series A with a preliminary A rating from Kroll; Kroll also rates a $30.59 million Series B tranche at BBB, and a $12.24 million Series C tranche at BB.

The note proceeds will be used to acquire 30 commercial jet aircraft engines that are on lease, or contracted to be leased. All but one of the engines are for narrowbody passenger planes; one engine for a widebody host aircraft accounts for about 9% of the portfolio – which has an initial appraised value of $305.9 million.

The weighted average remaining lease terms on the pooled engines is 5.9 years.

The largest concentration in the pool are five engines on lease to the U.S. carrier Frontier Airlines, representing 26.6% of the asset pool value. The next largest are Indonesia’s Lion Air (18.3%) and India’s SpiceJet (10.2%).

TEAM’s total portfolio consists of 48 engines on lease to 16 commercial airlines in Asia Pacific, Europe, the Middle East and the U.S.

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Aircraft lease securitization Esoteric ABS Kroll Bond Rating Agency