Wings Capital takes off with $678M aviation lease ABS
Wings Capital Partners is returning to the asset-backed market with its first aircraft-lease securitization in two years.
The six-year-old aircraft lease management firm, headquartered in Newport Beach, Calif., and domiciled in Ireland, is sponsoring a $678.1 million bond sale backed by proceeds from the lease fees for 23 single-aisle aircraft on lease to 17 airlines globally.
The deal, WAVE 2019-1, is Wave’s first deal since it issued a debut $480 million bond offering in November 2017.
Wings will offer three classes of notes (similar to its 2017 transaction, including a $555.5 million Class A notes tranche with an expected coupon of 3.825%. Both S&P Global Ratings and Kroll Bond Ratings Agency have issued preliminary A ratings to the senior notes.
Also in the capital stack are $81.7 million in Class B notes with BBB ratings from both agencies, and a Class C tranche sized at $40.9 million with a BB rating.
Wings Capital Partners will use the proceeds to acquire 23 narrow-body aircraft that are on lease to 17 airlines worldwide. The planes include 17 Airbus and 6 Boeing models, among them the most popular passenger models in demand for airlines: the medium-sized Airbus A321-200 and the competing Boeing 737-800.
The weighted average age of the aircraft is 4.5 years, including both young and mid-life aircraft, with average remaining lease terms of about 6.3 years.
All but one of the aircraft, representing 91% of the portfolio book value, are on lease to airlines based in emerging markets, a high level compared to other aircraft securitizations where the peak was 76% (MAPS 2019-1, a deal sponsored by Merx Aviation Servicing). Mexico’s Interjet has two aircraft on lease from Wings in the deal, while two airlines in Vietnam – VietJet Air and JetStar Airways – also have two apiece.
The deal has an expected eight-year payoff, which S&P says is lightly longer than other recently rated commercial aircraft lease securitizations with expected seven-year payoffs. The A and B notes mature on a straight-line 14-year amortization profile. The C notes amortize on an eight-year schedule.
Wings Capital will fund a $1.4 million maintenance reserve account at closing.
Goldman Sachs is the lead bookrunner and lead structuring agent. Credit Agricole is jointly structuring the deal, while Credit Suisse, MUFG, Natixis and BNP Paribas are serving as joint bookrunners to Goldman.
Wings was founded in 2013 by R. Stephen Hannahs and Two Sigma Private Investments. Hannahs is a former chief executive and group managing director for Aviation Capital Group (ACG). ACG parent Pacific Life Insurance Co. announced this month it has agreed to sell its shares in the aircraft leasing company to Tokyo Century Corp.