AerCap is out with the next portion of its GECAS acquisition funding package with a $2bn secured term loan issued by indirect subsidiary Setanta Aircraft Leasing DAC (Setanta), which is fully guaranteed by AerCap Holdings.
The credit facility is secured on a portfolio of aircraft comprised of 94 aircraft on lease to 35 lessees located in 25 countries, with the top five airline lessees accounting for a relatively high 59% of the pool, according to Fitch Ratings, which rates the facility as Baa2. Standard & Poor’s has assigned a BBB rating to the proposed facility.
The aircraft pool includes 57% narrow-body aircraft, including popular Boeing 737-800 (23% of the pool) and A320Neos (15%) with A320-200, A321Neo, 737-MAX, E195-E2 and other types making up the remainder (16%). Widebody aircraft represent 43% of the pool and include: A350s (17%) and Boeing 787s (15%), as well as 777-300ERs (6%) and others (5%). The weighted average age of the pool is 7.2 years with a weighted average remaining lease term of 7.4 years.
The collateral also includes equity interests in Setanta, the holding company and lessor entities associated with the owner SPEs, as well as a segregated cash collateral account. Key terms include a maximum loan-to-value (LTV) covenant of 75% assessed quarterly on the basis of semi-annual re-appraisals of the aircraft held by the owner SPEs (half-life base value) and an associated LTV cure mechanism, which requires partial loan prepayment, pledge of additional collateral, cash deposit or letter of credit if necessary to maintain compliance with the LTV covenant. The pool of aircraft held by the owner SPEs are subject to concentration limits pertaining to aircraft type, airline lessee, geography and average age. Aircraft that cause non-compliance with the pool specifications will be deemed to have an appraised value of not more than would allow the aircraft to not cause a breach of the pool specifications.
Proceeds of the facility will be used by AerCap to fund a portion of the pending acquisition of GE Capital Aviation Services (GECAS) that is expected to close in the fourth quarter of 2021 and for general corporate purposes.