Following the recent pricing of two aircraft lease-backed securitizations, year-to-date issuance in the U.S. nearly exceeds issuance for all of 1999 - clearly a strong showing for the sector thus far, said market watchers.

Pegasus Aviation's $950 million PALS 2000-1 should close this week, according to a source familiar with the transaction. PaineWebber is managing the transaction with Prudential Securities as co-manager.

The deal is structured in five parts: a AA-rated A1-class worth $381 million, a AA-rated A2-class worth $312 million, an A-rated B1-class worth $77 million, a BBB-rated C1-class worth $81 million, and a BB-rated D1-class worth $87. Duff & Phelps Credit Rating Co. provided the ratings.

Still in the pipeline, Triton Aviation could come to market in the second quarter with a deal worth between $600 million and $700 million. Chase Securities is lead manager.

Last month, Morgan Stanley Dean Witter brought its aircraft line, the MSAF-II, to market with a $1.3 billion deal that partially refinanced a transaction that closed in 1998, said one source. Under the same indenture Morgan Stanley issued three more sub-classes of bonds.

"One of the bigger reasons that we saw a dip last year is because Morgan Stanley did not come to market with any transactions," said Neil Wechsler analyst at DCR. "They have definitely done the big financings in the industry."

While it is likely that Morgan Stanley will remain active in the aircraft lease-backed sector this year, it is unlikely they'll bring another deal, Wechsler said.

"It's possible that they may be the lead banker for a third party," he added.

Morgan Stanley is also heavily involved in the enhanced equipment trust certificates (EETC) arena. The certificates are corporate bonds issued off the corporate debt rating of the specific airline. Though they are not technically asset-backed, they are often priced similarly and marketed to the same investors.

If an EETC deal defaults, the note holders receive the payments from the proceeds associated with the sale of the planes.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.