A pool of 22 aviation loan facilities with 107 loans will secure $507.2 million in asset-backed securities (ABS) from the volofin Finance (Ireland) Designated Activity and volofin Finance US.
The volofin platform, founded in 2019, offers financing solutions for aviation investment firms, airlines and aircraft lessors. This is the company's inaugural aviation loan ABS, and will fund both limited and full recourse facilities, according to analysts at Kroll Bond Rating Agency.
Forty-eight narrowbody aircraft, along with 12 widebody, 11 freighter 85 engines, two regional jet aircraft and five turboprop aircraft provide collateral to the loans. The aircraft operate with 51 credit counterparties in 27 jurisdictions, KBRA said.
As of the September 2024 cutoff date, the loan assets in vFin 2024-1 had an average loan balance of $4.9 million, a weighted average (WA) age of 15.6 years and a WA facility loan-to-value (LTV) ratio of 64.5%, KBRA said.
The collateral pool is static, with no reinvestment period. There are no concentration limits, and the loans have a weighted average remaining term of 4.6 years, KBRA said.
Canada represents the territory with the largest concentration of assets, 15.4%, with the United States and Turkey following with 12.2% and 6.7%, respectively.
The deal will issue notes through four classes—A, B, C and D, and they all have a June 2037 legal final maturity date, the rating agency said. KBRA assigns AA and A to classes A and B, respectively.
BNP Paribas, IBA Group and mba Aviation are co-structuring agents on the deal, the rating agency said.
vFin 2024-1 has several structural features that also serve as credit benefits. The trust will repay senior expenses and fees to noteholders sequentially. They also benefit from interest coverage ratio, and an asset coverage ratio. The notes also have a reserve account funded with amount equal to $0.9 million, which will cover any shortfalls in senior expenses and classes A and B note interest until December 2028. After that funds will be released to the interest collections account, KBRA said.
There is one potential credit drawback to the collateral. Of the 107 loans, 91 of them, representing about 89.8% of the pool, have a final balloon payment. Overall, balloon payments represent about 49.1% of the initial aggregate loan balance. At the time the balloon payments are due, that represents a WA facility of 34.0%.
