The first quarter of aviation ABS deals have been boosted by a further two deals from engine lessor Willis Lease Finance and DVB’s second ABS this quarter.
Willis Lease Finance has issued its fifth engine ABS under the WEST programme. The $366.2 million WEST V 2020-1 ABS comprises three tranches of notes: $303 million A rated A notes with an initial loan-to-value (LTV) of 72%; $42.1 million BBB-rated B notes with an 82% initial LTV; and $22 million BB-rated C tranche, with a 87% initial LTV.
The notes will be secured on a portfolio of 75 engine assets, which comprises in-production, in-demand engine variants from the A320ceo and 737NG families. Additionally, there are three A319-100, powered by CFM56-5B engines. The weighted average (WA) remaining lease term of on-lease engines is 2.0 years, in line with prior WEST pools. Of the 57 initial assets, 29 are already owned by Willis Engine Securitization Trust II (WEST II), and are being refinanced with this transaction.
Bank of America Securities is the structuring agent for WEST V, with BofA supplying the liquidity facility. Deutsche Bank is the trustee, operating bank and security trustee. Willis Lease Finance remains as the servicer.
This engine ABS transaction has been launched while the inaugural TEAM engine ABS – Sunbird – is also in the market led by Citi and CA-CIB.
Also in the market today is another transaction from DVB (now MUFG). LUNAR Aircraft 2020-1, which secures a portfolio of 18 aircraft – 17 narrowbodies and one widebody aircraft (a A330-300 on lease to Finnair with a remaining lease term of 6.1 years) – ranging from mid to end-of-life, with a weighted average (WA) age of 9.2 years and a weighted average remaining lease term of 3.9 years.
DVB Bank (MUFG) will remain as the servicer, while an affiliate of Sculptor Asset Management (previously known as Och-Ziff Capital Management) will act as the asset manager for the investor and will acquire the e notes.
The debt portion is offered in three tranches: $325.8 million A notes, rated A, with an LTV of 66.9%; $53.6 million, BBB-rated B notes with a 77.9% LTV; and $29.7 million C notes, rated BB, with an 84% LTV.
Lead structuring agent is Deutsche Bank with joint structuring agent and joint bookrunners MUFG and Citi. MUFG is providing the liquidity facility. Phoenix American Financial Services is the managing agent. UMB is the trustee, administrator and operating bank.
Meanwhile, Avolon’s latest ABS transaction – SAPA II 2020-1 – led by joint lead structuring agents Mizuho and Deutsche Bank, with joint lead bookrunners Credit Agricole-CIB and MUFG, has priced. (see SAPA launch story here).
The $490 million A-rated A notes with a loan-to-value (LTV) of 65.6%, have a 3.228% coupon and 3.250% yield; $86 million BBB-rated B notes, with an LTV of 77.1%, have a 4.335% coupon and 4.375% yield; the $44 million BB-rated C notes with a 83% LTV, have a 6.779% coupon and 6.875% yield.
Proceeds from the sale of the initial notes will acquire a pool of 21 midlife aircraft comprised of in-demand narrowbody aircraft including current generation A320 and 737 family aircraft, with a weighted average age of 7.5 years.
Busy quarter for aviation ABS
