SMBC Aviation Capital plans to sell $671.9 million of securities backed by a portfolio of aircraft leases.
The weighted average age of the leases pooled under Orbit Aircraft Leasing is 7.2 years, slightly older than other recent transactions rated by Fitch in this asset class. For example, BOC Aviation's SAIL transaction issued on Oct. 16 is collateralized by a pool of leases backed by aircraft with an average age of 4.7 years.
Fitch assigned preliminary ratings of 'A' to $561 million of A1 notes; 'BBB' ratings to $85 million of class B1 notes; and 'BB' ratings to $25.5 million of class C notes. The notes are structured as 8-year bonds with a legal final of November 2040.
The pool is comprised of two types of aircraft: tier one aircraft, which generally have long expected remaining useful lives and tier 2 aircraft, which consists of midlife programs with established operator bases and often includes in-demand wide body aircraft as well.
The largest lessee in the pool is American Airlines, which leases 7.7% of the aircrafts; Monarch Airlines is second largest, leasing 6.9% of the pool; and United Airlines is the third, leasing 5.7% of the pool. In total the pool is comprised of 25 lessees, many of which are unrated or speculative grade rating, which increases the risk of default. However this risk is partially mitigated by strong lessee diversification in the pool.
Goldman Sachs, Citibank, and SMBC Nikko Securities America are joint debt structuring agents on the deal.