Thunderbolt III brings $437M in aircraft leases to the ABS market

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Air Lease Corp. is making a straightforward trip to the asset-backed securitization (ABS) market with two trusts that will raise $437 million to purchase aircraft for its aircraft lease and management business.

Thunderbolt III Aircraft Lease Limited, also known as “TBOLT III Cayman,” and Thunderbolt III Aircraft Lease US LLC “TBOLT III USA” will use the proceeds from the notes to buy 19 aircraft to lease out to 18 lessees in 15 countries, according to Kroll Bond Rating Agency.

Thunderbolt is coming to the ABS market for the fourth time. The Thunderbolt trusts have targeted a fleet of aircraft that have a weighted average age of 9.7 years and 3.8 weighted average years remaining, according to KBRA. The portfolio has an initial value of about $556.4 million. The deal is comprised of two series of notes, and both will amortize on a 14-year, straight-line schedule for the first five years, and they will switch to a 13-year schedule after that, according to KBRA.

Fitch Ratings also issued an assessment on the transaction, and noted that one of the positive ratings drivers was that narrow-body aircraft make up 83% of the pool. A320s and B737s make up most of the aircraft, which are some of the world’s most popular aircraft, Fitch said. After stress-tested cashflows, Fitch found that both series of notes were expected to pay in full before their legal maturity dates.

Series A will issue about $370 million in notes rated ‘A,’ and the series B will issue $67 million. All of the notes will repay investors on a fixed-rate basis, the same as "Thunderbolt II" issued in July 2019.

Rating agencies did note one credit weakness, however. Most of the lessees in the pool are either unrated or speculative-grade, according to Fitch, and the rating agency assumes the unrated lessees might perform at the same level as a ‘B’-rated entity.

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