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Seraph Aviation markets debut $726M aircraft-lease ABS

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Seraph Aviation Management, an Ireland-based entity of specialized aviation asset management firm Stellwagen Group, is launching its first-ever aircraft-lease securitization after a dozen years of managing passenger airline fleets.

The $726 million Raptor Aircraft Finance I Ltd. is a transaction backed by a portfolio of 16 narrow-body and three wide-body aircraft – all of which are relatively young planes with an average age of 3.92 years.

The airlines are on lease to 14 different airlines, with a 6.78-year weighted average remaining lease terms.

The deal will include three classes of notes, including a $553 million Class A tranche of notes with preliminary A ratings from S&P Global Ratings and Kroll Bond Rating Agency.

The agencies were slightly split on two subordinate note tranches. A $116.5 million Class B notes (paying 5.193%) are rated BBB by S&P and BBB- by Kroll, while $56.5 million in Class C notes carry S&P's BB rating and a BB- from Kroll.

Seraph was formerly known as Volito Aviation Services prior to 2015.

The notes are expected to be paid down after 7 years.

Deutsche Bank is the lead structuring agent and lead bookrunner; Joint bookrunners are Standard Chartered Bank and BNP Paribas.

Approximately 80% of the aircraft are based in emerging markets, according to presale reports.

The deal, when closed, will be the 13th aircraft-lease securitization to price in 2019, totaling $6.6 billion.

The continued growth in the esoteric aviation-lease ABS asset class has drawn from an increasing dependence on lease operators in the global commercial fleet for airlines. Lessor-owned aircraft account for over 40% of the fleet, growing to about 50% in the next five to 10 years, according to S&P.

“Aircraft leasing is attractive to airlines because of lower capital outlay requirements, fleet planning flexibility, delivery position availability, and residual value risk avoidance,” S&P’s presale report stated. “In addition, the lessors generally are more creditworthy, which gives them better access to capital at more attractive pricing than many airlines.”

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Aircraft lease securitization