DVB is in the market with a $722.5 million asset backed securitisation (ABS) transaction, KDAC Aviation Finance, which comprises three tranches of notes secured on a portfolio of 36 aircraft on lease to 30 lessees located in 24 countries.
The $565 million A notes, rated A by Kroll Bond Rating Agency, have an initial LTV of 65.0%; the $95.5 million B notes, rated BBB, have an initial LTV of 76.0%; while the $62 million C notes with an LTB of 823.2% are rated BB-. The A and B notes amortize on a 12-year straight-line schedule for the first four years and an 11-year straight-line schedule thereafter. The C notes amortize on a seven-year straight-line schedule.
The portfolio consists of 28 narrowbody aircraft (57.7% by value) and eight widebody aircraft (42.3% by value), which represent approximately 19.0% (by number of aircraft) of DVB’s managed fleet. The portfolio has an initial weighted average age of approximately 11.8 years.
DVB is the servicer for the portfolio. Lead structuring agent and joint lead bookrunner is Citi. BNP Paribas is a joint structuring agent and joint lead bookrunner. Wells Fargo is the trustee, security trustee and operating bank, and the nine-month liquidity facility provider. Maples is the managing agent.
Meanwhile, Prime Capital has successfully launched the Prime Capital Aviation Debt Fund (PCAD), a SICAV-SIF-subfund of Prime Capital Debt SCS in Luxembourg. The fund will invest in senior, aircraft-backed loans. Several insurance companies have already committed US$115 million to the fund on its first closing. For following closings, investors will be able to invest additional capital of up to a total volume of US$400 million. For the closed-end fund an investment period of up to two years is planned. The tenor is 10 years with two additional extension options. The fund is denominated in US-Dollars, in line with the underlying aircraft loans, and its target net return is expected to be in excess of 4%.
Prime Capital will work together exclusively with DVB Bank as a sourcing partner.
Prime Capital and DVB have been cooperating in this asset class for more than a year now and have already successfully invested over US$200 million for Institutional Investors together.
Prime Capital has operated in the aircraft financing market since 2014. Until today, the company’s focus has been customized mandates in aviation debt financing for its institutional clients. And has financed more than 150 financed aircraft. Prime Capital’s current assets under management and commitments in aviation finance sum up to an amount of US$1.2 bn.