Altavair has launched a $582.9 million securitization, the proceeds of which will fund the acquisition of 24 passenger aircraft to be operated by 11 third-party lessees, joining a recent rush of aviation asset backed securities (ABS) offerings that have taken off in anticipation of a busy year for the sector.
The ALTDE 2025-1 Trust deal is split into $527.7 million and $55.1 million tranches that Fitch Ratings anticipates rating 'A' and 'BBB' and carrying LTVs of 67% and 74%. Altavair will be responsible for managing the aircraft, including leasing them, maintenance and disposition, according to Fitch.
Deutsche Bank Securities is the lead structuring agent on the Altavair deal, with Pivotal Corporate AMS Limited acting as managing agent, and Natixis S.A. acting as liquidity facility provider through its New York branch.
The Altavair deal follows aviation ABS transactions this year by Gilead Aviation, Carlyle Aviation Management, and Castlelake Aviation Holdings that, along with Altvair's transaction, will total $2.521 billion. That represents a heady start for the aviation ABS sector in 2025, which KBRA forecasts totaling $6.5 billion for the entire year, a 14% increase over 2024's $5.7 billion.
"The forecast is supported by rising asset yields over the past few years, coupled with a lower cost of debt resulting from prior rate cuts and tighter spreads—elements that contribute to ABS being an attractive funding source," KRBA said in a recent presentation.
The rating agency further noted "potential upside to the forecast, as we currently have visibility into seven ABS securitizations through early in Q2 2025,indicating that at least a few more aviation ABS transactions are taxiing down the runway.
A key positive ratings driver Fitch identifies for the Altavair deal is that its aircraft pool comprising primarily Tier I narrow-body and wide-body aircraft represent 73% and 19% of the pool value, respectively, with Tier 2 and Tier 3 aircraft each representing 4%.
Fitch said the pool is well diversified, with aircraft spread across Latin America, North America, Europe and Asia Pacific. By aircraft value, 3% are leased to lessees Fitch views as investment-grade lessees, 52% to 'B' category lessees, and 45% to those between "CCC' and 'CC'.
"The weighted average credit rating by MABV (maintenance adjusted base value) is between 'B-' and 'B', which is similar to other recent aircraft ABS transactions," Fitch said.
