If a proposed lease between Boeing Co. and the U.S. Air Force for 100 Boeing 767 refueling tanker jets goes through, the Street could find itself distributing a windfall $17 billion in aircraft lease ABS, reports Investment Dealers Digest, a sister publication of ASR.

Such a deal could bode well for the ailing aircraft ABS market. Theoretically, USAF lease payments would back the securitization. Sources described Boeing selling the aircraft to an SPE, which would finance the purchase by issuing ABS. The trust would then lease the aircraft to the Air Force, which is apparently a pretty decent credit.

Securities backed by the government's lease payment "would be an indirect obligation and something that could be more secure than a mortgage bond," said a former head of aviation investment banking at a leading Wall Street firm. That means they "would sell at rates that are only at modest premiums to Treasury bonds, which are a direct obligation of the U.S. government," he added.

The SPE, which would be the lessor, would be set up as a finance company, co-managed by the Air Force and Boeing. The Air Force has a walk-away clause, which could mean the bonds don't score a triple-A rating.


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