Carlyle, the commercial aircraft management company, is preparing to issue $518.3 million in asset-backed securities (ABS) funded by revenue from a pool of leases on 23 aircraft leases, primarily narrowbody.
Proceeds from AASET 2025-1 will fund the acquisition of 21 narrowbody aircraft and two widebody aircraft, according to Kroll Bond Rating Agency. AASET is a master trust, permitting extra notes to series A and B, before the second anniversary, if the transaction meets a series of seven conditions.
For one, subsequently issued notes cannot cause a debt service coverage ratio (DSCR) cash trap event, a DSCR cash sweep or a breach of the utilization test. Also, the (anticipated repayment date) ARD for the subsequent notes cannot be earlier than the ARD of the original notes' ARD but must be within 12 months after the notes' ARD. The pool's weighted average (WA) age cannot increase, either.
AASET 2025-1 is the second of Carlyle's 17 ABS transactions using that structure, KBRA said. It will issue notes through two classes of fixed-rate notes, A1 and B1. All the notes are expected to repay in February 2032, with a legal final maturity date of February 2050. The A1 and B1 notes have initial loan-to-values (LTV) of 69.0% and 77.0%, respectively.
KBRA assigns A to the A1 notes, but did not rate the B1 tranche.
The transaction's structure includes several features that help boost credit to the notes, according to KBRA. They include a minimum assets test, requiring the issuers to own at least 10 assets at the end of the nine-month delivery period, or seven assets after the delivery period, KBRA said.
There is also a here-month DSCR test, calculated three months retroactively, to determine DSCR triggers and cures.
The series A notes cannot defer interest, so failure to pay interest would be considered a default event, according to KBRA. Interest on the B1 notes, however, are subordinated to interest in the waterfall, which is a positive credit characteristic for the series A notes.
