Irish aircraft leasing company Avolon is preparing to launch a $636 million aircraft lease securitization.
The deal called Emerald Aviation Financing Series 2013-1 is market the issuer’s debut in the securitization market. Kroll Bond Ratings Agency has assigned preliminary ratings to the deal. The class A-2 notes are rated ‘A’ and the class B-1 notes are rated ‘BBB’. Both tranches are structured with a final maturity date of Oct. 15, 2038.
Wells Fargo Securities is lead manager on the deal.
The deal is backed by a portfolio of 20 aircraft initially leased to 15 commercial airlines located in 14 countries, according to the presale report. Approximately 72.9% of the aircraft are narrow body commercial aircraft manufactured by Airbus and Boeing; 20.9% are wide body aircraft manufactured by Airbus; and 6.2% are large regional jests manufactured by Empresa Brasileira de Aeronautica.
KBRA noted in the presale report that the smaller portfolio, when compared to other lease securitizations, has contributed to high lessee and regional concentrations.
“The initial pool of lessees is comprised of 15 airlines, having a non-investment grade credit profile,” said KBRA. However, “the weak credit quality of the lessees in the Emerald portfolio is common in the airline industry and is typical of most aircraft ABS transactions.”
Avolon is headquarter in Dublin, Ireland. The company was founded in May 2010 and has built a portfolio of 95 owned and managed aircraft with 76 deliveries scheduled between 2014 and 2021, according to the presale report.
In January, the company formed a joint ventur with Wells Fargo to build it portfolio of aircrafts primarily through sale and leaseback transactions with airlines on new aircraft. It had an initial target portfolio size of $500 million.
Wells Fargo is the majority shareholder and provides banking and debt financing facilities for the business.