A pool of leases on 48 commercial and freighter aircraft operated by 23 third-party lessees will secure $612 million in asset-backed securities coming to market through the FTAI MRE securitization platform.
FTAI MRE 2026-1 Cayman and FTAI MRE 2026-1 US—known together as MRE 2026-1—will issue two tranches of notes, both of which have the same anticipated repayment date and legal final maturity date, June 2032 and June 15, 2051, according to analysts at Kroll Bond Rating Agency and Fitch Ratings.
The class A notes will issue the bulk of the debt, $585 million, according to the rating agencies.
Fitch notes that Atlas SP Securities, Global Securities and Deutsche Bank Securities are joint structuring agents on the deal.
Narrowbody aircraft account for the overwhelming majority of portfolio aircraft by value (90.6%), KBRA said, and five narrowbody freighter aircraft, accounting for 9.4% of the pool by value.
Lessees are located in 19 jurisdictions, and as of the April 30 cutoff date, the portfolio had a weighted average (WA) age of about 15.6 years, according to KBRA.
As part of the transaction's structure, MRE 2026-1 has a minimum number of assets test, in which it will begin to fully pay down the notes if the issuer does not own at least eight assets.
The transaction debt service coverage ratio (DSCR) was calculated from a three-month lookback window of cash flows, shorter than the ABS transactions pre-COVID 19, particularly ones that use a six-month lookback window.
If the DSCR falls below 1.20x on any payment date after the third payment date, then a cash trap event will occur, KBRA said. Also, an early amortization event will occur if the DSCR is less than 1.15x within a three-month period or if the portfolio's utilization rate is less than 75% on any payment date.
This will also apply if fewer than eight aircraft are owned at the end of the delivery period, KBRA said.
Fitch also notes that end-of-lease maintenance payments expose aircraft securitizations to lessee credit risk. This deal, however, has limited exposure, accounting for only 3.1% of total available collections under Fitch's 'A' sf scenario. That is well under the level seen by other aircraft ABS it rates, the company said.
Fitch assigns A and BBB+ to classes A and B, respectively. KBRA assigns A to the class A notes.
