GE Capital is prepping a $305 million securitization of aircraft engine leases, according to a presale report published by Standard & Poor’s.
The deal, Turbine Engines Securitization Ltd., consists of three tranches. S&P assigned a preliminary A’ rating to the $275 million senior class 2013-1A and a BBB’ rating to the $30 million class 2013-1B. There is also a class E of notes that is unrated.
The bonds will be backed by beneficial interests in engine trusts and subsidiary companies that own a portfolio of 32 aircraft engines, related leases, and receivables, according to the presale report. GE Capital Aviation Services is the servicer.
Citigroup Global Markets is the structuring agent and placement agent on the deal.
The portfolio will generate cash from payments received under the current leases or future leases when the current ones expire, proceeds from engine sales, security deposits, liquidity reserves, and interest earned on invested cash. In addition to typical securitization expenses such as servicer fees and administrative agent fees, the portfolio's expenses will include engine maintenance, repossession, and re-leasing costs. The current leases are operating leases and had a 57-month weighted average remaining term as of Oct. 30, 2013.