The PK ALIFT platform is coming to market to sell $900 million in asset-backed securities, backed by a pool of 47 loans and loan facilities, or collateral obligations, through limited partner interests in aviation-related entities.
PK ALIFT Loan Funding 8 LP will use the proceeds from the securitization to make intercompany loans to the entities, which operate in various jurisdictions around the world, including Japan and the United Kingdom, according to Morningstar DBRS.
The underlying pool of assets is unusual for an aviation deal, DBRS said, with a highly diversified mix of 89 aircraft and 12 aircraft engines, DBRS said.
The pool mix consists of 29 different aviation asset types, with a third being new and emerging technology aircraft, and 45.7% are current technology aircraft, DBRS said. The rest of the pool is composed of freighters and engines.
Narrowbody aircraft accounts for (60.1%), freighters (16.0%), widebody passenger aircraft (14.9%) and aircraft engines, the rating agency said.
On a weighted average (WA) basis, the loan-to-value (LTV) is close to 63.7%, DBRS said.
Six tranches of notes—class A-F senior secured floating rate loans; classes A, B, C, D and a subordinate tranche—will offer the notes to investors, according to DBRS.
BNP Paribas, Mizuho Securities, RBC Capital Markets and SMBC Nikko Securities America are managing the transaction, according to Asset Securitization Report's deal database. DBRS says the transaction is slated to close on March 2.
Cashflow to the deal is protected by several layers of credit enhancement, according to the rating agency. Overcollateralization, measured by two levels of loan-to-value measurement, is one. Credit protection also includes subordination, and a temporary reserve account that gets funded when the transaction closes, DBRS said.
As a result, PK ALIFT's class A-F senior secured tranche, secured by floating-rate loans, and the class A senior secured fixed-rate notes benefit from a credit enhancement level of 54.5%, DBRS said. The class B tranche will issue secured, fixed-rate notes and benefit from 50.2% in credit enhancement.
Classes C and D, which issue are secured, deferrable fixed-rate notes are covered by credit enhancement levels equal to 41.2% and 36.3% of the respective, outstanding note balances.
DBRS assigns ratings of AAA to the class A-F and A notes; AA to the class B notes; A to the class C notes; and BBB to the class D tranche.
