The debut aircraft lease securitization of Ireland-based Elix Aviation Capital is also the market’s first transaction backed exclusively of turboprop aircraft.
Prop 2017-1 is a $411 million ABS comprised of three classes of loans that will finance 63 aircraft that Elix has on lease to 17 airlines. The aircraft in the pool make up the bulk (82.9%) of the entire fleet owned by Elix, which is majority owned by Oaktree Capital Management.
KBRA has assigned an ‘A’ rating to the Class A $300 million loan tranche, a similar rating granted to the senior tranches of other regional aircraft leasing firms covered by KBRA, including Castlelake’s Global Aviation Finance & Assets and Aldus Aviation.
Over 37% of the planes in Prop 2017-1 are leased to U.S. based regional airlines like CommutAir (operating as United Express), IslandAir in Hawaii and Piedmont Airlines, a Maryland-based carrier for American Eagle. The other large concentrations are in India (18.9%) and Ethiopia (8.8%).
The 63 aircraft have an initial value of $545.1 million for Elix, and a weighted average age of approximately 9.7 years, with a significant percentage (46%) of newer vintage aircraft that are less than six years of age, and 37.7% are less than two years old.
The Series A and B loans will amortize on an 11-year straight-line schedule for the first four years of the deal, converting to a 13-year schedule thereafter. The Series C notes will amortize on a five-year schedule for years one and two, followed by a seven-year amortization schedule for the life of the transaction.
Elix has pledged $15.6 million in maintenance reserves to the aircraft in the transaction.
Oaktree’s involvement marks the asset management firms’ third foray into aviation platform investments since 2004.