DVB Bank, a German-based transport finance specialty bank, is refinancing a 2017 securitization of aircraft lease receivables.
The London branch of the bank will market $629.8 million of notes in KDAC Aviation Finance will refinance outstanding notes
According to S&P Global Ratings, the new deal will include $505 million in Series A notes with a coupon of 3.75%; a $60.34 million Class B series notes with a 5% coupon, and a $64.1 million Class C tranche of notes expected to price at 7%.
The Class A notes carry preliminary A ratings from S&P and Kroll Bond Rating Agency.
The Class A and B notes will follow a straight-line amortization schedule of 11.3 years, with an expected final payment date of seven years.
The portfolio consists of 34 narrowbody and widebody aircraft on lease to 28 airlines in 24 countries. The aircraft are older-vintage planes at a weighted average age of 13.8 years, but all but one of the planes remains an in-production model.
While the original deal allowed for a seven-year reinvestment period – potentially for the acquisition of new aircraft into the pool from cash-flow proceeds and aircraft sales – the refinanced portfolio is not expected to have any further collateral changes, according to presale reports.
The issuer will include performance triggers that accelerate amortization of the notes should either the debt service coverage ratios breach certain levels (1.15s for a cash sweep of excess principal, and 1.2x for a cash trap), or if less than 75% of the planes are under lease at some point during the life of the deal.
The largest lessee is Air Asia X, with 10.1% of the lease by contract value.
DVB has leased and or sold over 300 aircraft since its inception, according to reports, and currently manages a fleet of approximately 176 aircraft with 83 lessees globally.
Goldman Sachs, BNP Paribas Securities, Citigroup Global Markets and KKR Capital Markets served as joint bookrunners on the deal.
