BBAM Aircraft Leasing plans to issue $1.2 billion of securities backed by aircraft lease receivables, according to Fitch Ratings.
The transaction called ECAF I Ltd., collects receivables from a portfolio of 49, mostly of tier 1 commercial aircraft manufactured by Airbus (47.1%) and Boeing (52.9%).
The weighted average age of the aircraft, 6.2 years, makes the pool relatively older than recent Fitch-rated transactions; 45.3% of the pool matures in the next five years, which is significantly increased relative to previous transactions, which ranged from 30.1% (CAF III) to 31.8% (RISE). A small portion of the portfolio (8.7%) is aged over 15 years, and will likely be sold at the end of their current leases.
“Lease maturity distribution is important in aircraft operating lease transactions, as cash flow available to pay principal may decline if multiple aircraft come off lease and are grounded at the same time,” the presale report states. “Given the elevated age of the portfolio, it is possible that certain aircraft will be sold at lease maturity.”
The pool benefits from a slightly higher degree of lessee diversification, compared with recent aircraft ABS transactions. There are 37 initial lessees in the portfolio. Singapore Airlines, the flag carrier of Singapore, is the largest lessee at 14.6%, followed by Philippine Airlines (11.0%), LATAM (10.6%), Aeroflot (6.7%) and Pegasus (5.5%). Deutsche Bank, Citigroup and BNP Paribas are joint lead bookrunners.Fitch has assigned a preliminary A’ rating to both the class A-1 and class A-2 notes that together total $1 billion, and a BBB’ rating to the $160 million of class B-1 notes. All of the notes have a legal final maturity of May 2040.
