Willis Lease Finance Corp is preparing to sell investors $596 million in asset-backed bonds secured by a pool of leases on aircraft engines and frames, almost two years after its last deal.
The transaction, Willis Engine Structured Trust, VIII, will sell its fixed-rate notes through two tranches, all with a legal final maturity date of June 2050, says Kroll Bond Rating Agency. Joint structuring agents and lead bookrunners MUFG Securities Americas and
Fifty-two narrowbody host engines account for 85.7% of the transaction's value. The pool also consists of four widebody host engines, six turboprop and regional jet host engines, and two narrowbody airframes underpin the leases in the collateral pool, according to the rating agency. As of the deal's cutoff date, April 15, the initial lease contracts had a weighted average (WA) remaining term of about 1.9 years.
Willis Engine will use a senior-subordinate repayment structure, and if a series of C notes is issued, it will receive payments subordinate to payments to the series A and B on scheduled payment dates, the rating agency said.
KBRA notes that Willis Engine has done eight prior securitizations, and three of those have been fully repaid, bolstering confidence in Willis Lease Finance as servicer.
Willis Engine Trust VIII features several other elements that bolster credit to the notes. A minimum assets test, for instance, requires that if the issuer does not own at least eight assets the deal will begin to use any excess cash to fully pay down the notes, KBRA said.
There is a cash trap trigger, KBRA said. Should the deal's debt service coverage ratio (DSCR) fall below 1.15x on any payment date after the sixth payment date, then a cash trap event will occur. There will also be an early amortization event if the DSCR is less than 1.10x within a three-month period.
A $6 million security deposit was funded at closing, KBRA said, while ongoing targeted amounts will be based on the amount of leases expiring within four
months. If there are excess amounts, they can be used to cover obligations like senior expenses and interest shortfalls.
KBRA assigns A to the class A notes and BBB to the class B notes.
