The recent Northwest Airlines enhanced equipment trust certificates deal, which was placed entirely in the European market, was the first EETC to receive an unwrapped Aaa' rating from Moody's Investors Service.
Both Fitch and Standard & Poor's also rated the transaction, triple-A/single-A.
This true cross-border deal, with the assets being 100% U.S. originated, was sold in Europe because of market appetite.
Credit Lyonnais was arranger and structuring agent on the deal, with ABN Amro, HypoVereinsbank, and Deutsche Bank.
Although EETC's are not technically securitizations, the deals are structured and secured by aircraft, and often sold to the same investors that buy pooled aircraft lease securitizations. One primary difference between EETC and aircraft lease deals is that the securitizations are backed by payments from multiple obligors, compared to EETCs, where there is only one obligor.
Moody's does draw a solid line between the two transaction types, and rates them via a group effort of the structured finance and industrial ratings groups.
As for the Aaa' from Moody's, the rating agency was comfortable with the steady resale value of the collateral pool, primarily narrow-bodied A320 and A319 aircraft.
"The company did a lot of research to show us the future values of the A319s and A320s," said Nicolas Weill, a senior credit officer at Moody's. "They were able to show us that [those aircraft] hold their value pretty steadily over time."
In addition, the deal featured a longer than average control period for the class-A's, and the loan-to-value on this deal is one of the lowest Moody's has ever seen.
The two part deal was worth approximately $400 million, with a $215 million class-A pricing at Libor plus 48, and the $180 million class-B pricing at Libor plus 80.
That Moody's recently awarded its first ever Aaa' to a pooled aircraft lease deal (G.E. Capital Aviation) is unrelated and coincidental, Weill said.
