Air Lease Corporation (ALC) has launched a second asset backed securitisation (ABS) under its Blackbird Capital moniker and the lessor’s fifth ABS overall. Blackbird Capital, a joint venture between ALC and Napier Park Global Capital formed in 2014, was designed to enable ALC to invest in profitable lease deals that were previously passed on for various reasons, including customer concentration limits or aircraft type/age. The success of the first fund enabled the two companies to extend their partnership with Blackbird Capital II in 2017, which is issuing the ABS.
The $745million Blackbird II 2021 ABS transaction offers two series of notes: $630million A-rated A notes, with an initial loan-to-value of 63.7%, and BBB-rated B notes, with a 75.3% LTV. For months one to six, both classes of notes amortise on 16-year straight line basis, and 14 years after month seven.
BofA, Mizuho, Citi, BNP Paribas and MUFG are joint structuring agents. Mizuho is providing the liquidity facility, Citi is the trustee and Canyon Financial Services is the managing agent. Collateral verifications, IBA and mba provided the appraisals. Alton Aviation is the maintenance provider. ALC remains as the servicer.
Proceeds from the sale of the notes will be used to acquire 18 aircraft on lease, or expected to be on lease, to 12 lessees located in 11 jurisdictions, including one A320-200 that is off-lease. At closing, the Blackbird II portfolio will consist of nine aircraft – three A330-900neos, five A321-200neos and one A320-200neo that are on lease to six airlines. The average weighted age of this portfolio is one year with an average 10.5 year remaining lease term. The nine additional aircraft to be acquired include five unowned aircraft – three A321-200neos, one A320-200neo and one A320-200 – and three aircraft (two A321-200neos on lease to IndiGo and one A321-200 on lease to Jet2) that have yet to be delivered. The average weighted age of the entire portfolio is three years with an average 8.3 year remaining lease term.
As of April 2021, two of the initial lessees, Aerolineas Argentina and Vietnam Airlines were more than 30 days late on lease payments. Another of the aircraft is currently off lease and one aircraft is subject to a usage-based rent structure.
In most other aviation ABS transactions, at the time they are transferred in the securitization, each asset must be less than 30 days past due on rent payment, they must be on lease, they must have been delivered to the lessee, and be without any material defaults. In this transaction, due to the Covid-19 industry disruption, there is a 25% allowance by value to not have any of these condition precedents to delivery.
The transaction also includes a unique minimum number of total assets test. If there are fewer than six aircraft in the portfolio, the transaction will trigger a Rapid Amortization Event where any excess cash will be used to pay down the Series A Notes and then the Series B Notes, sequentially (after scheduled principal).