Ashland Place, the aviation asset financing platform backed by Davidson Kempner Capital Management (DKCM), has successfully priced its second aviation loan asset-backed securitisation transaction, APL Finance 2025-1 (APL 2025-1).
The latest reports state that the $414.4 million ABS transaction is substantially oversubscribed on all four tranches, with initial price talk (IPTs) on the senior A notes at 150 to 160 basis points (bps), tightening substantially to a spread of 125bps at final pricing.
This represents a new record low for an A note in the aviation loan ABS space, and is notably inside of the senior tranche of PK Airfinance’s recent AAA-rated 2025-2 issuance, where the A notes priced with a +130bps spread. The securitisation has four tranches of notes, with the A-tranche through C-tranche receiving investment grade ratings from KBRA.
The subordinated notes across the stack also tightened significantly from their IPTs. The B notes tightened from 200bps IPT to 170bps, the C notes from mid-high 220bps to 225bps, with the D notes down from the high 400-500bps to 465bps.
The APL 2025-1 issuance attracted very strong interest from both repeat and new investors across all tranches.
The $295.9 million A tranche – rated AA by KBRA – has an initial loan to value (LTV) ratio based on loan balance of 67.5%, as well as an LTV ratio based on collateral balance of 45.7%. The $56.1 million B tranche, rated A, has a loan balance LTV of 80.3% and collateral balance LTV of 54.4%. The $32.3 million C tranche – rated BBB – has a loan balance LTV ratio of 87.6% and 59.4% collateral balance LTV. The final D tranche totalling $30.2 million and rated BB-, has a loan balance LTV of 94.5% and 64% collateral balance LTV.
The notes are backed by a static pool of loan facilities secured by 13 narrowbody aircraft, eight freighter aircraft, two widebody aircraft and three narrowbody host aircraft engines on lease to 15 lessees located in 13 jurisdictions.
Proceeds from the notes, which were oversubscribed, will be used to acquire this portfolio of 11 loan facilities comprised of 26 loans.
Four brand new E195-E2s make up 26% of the portfolio by value, followed by the A320-200 type at 19.8%, A330-900neo at 12.6%, and the A321-200 at 10.1%.
Other assets include 737-800 freighters (both SF and BCF variants), a 747-400 freighter, an A321-200 freighter, as well as an A330-200 and a 737-800 aircraft. In addition, the portfolio’s standalone engines include CFM56-7B and CFM56-5B assets.
Ashland Place believes APL Finance 2025-1 has a unique collateral pool with the loan facilities being 100% primary origination, 100% sole lender and 100% secured. Ashland Place will be the servicer on the transaction.
“We are incredibly proud to be issuing our second – and largest – aviation loan ABS in just under two years since our first ABS transaction,” said Jennifer Villa, Ashland Place’s Executive Director and Group Head in an official statement. “This transaction underscores our deep experience in aviation lending. We are encouraged by the strong demand for our second ABS transaction as we will continue to be active issuers in the aviation ABS market.”
Formed in September 2021, Ashland Place was set up with the specific aim of originating well-structured aviation loans to quality borrower and underlying lessee credits, and the specific long-term view of securitising sections of the loan book on a regular basis. This remains its strategy. Today, aviation loan ABS transactions are no longer considered novel, largely due to the market being shaped by the Ashland Place team – one of the pioneers in opening the space in 2023, just behind SALT 2021-1, which was differentiated from the Ashland Place product since Stonepeak utilised the issuance as acquisition financing for a loan book.
This second loan ABS from Ashland Place was issued during a very different environment than 2023, and during a busy market for aviation securitisations, which proved attractive for investors to pile into aviation loan paper. Coming to market again in 2025, the experience was very different from the inaugural transaction, as Villa explains in an exclusive interview with Airline Economics.
“When we closed APL 2023-1, the pricing was nowhere near it where it is now because it was a new product and market conditions in general were very different,” says Villa. “In 2023, we were introducing a new loan ABS product, which was unfamiliar to many investors and I walked into some really tough rooms where many investors had lost money on aviation lease ABS during the pandemic. At that time, we weren’t just launching a new product, we were fighting the perception that aviation was too risky.”
Although the environment today is much more welcoming than 2023 for aviation asset investment, the marketplace is crowded and Villa needed to spend more time explaining how Ashland Place is different from competitors such as PK Airfinance and volofin, both issuers in the loan ABS space subsequent to Ashland Place’s 2023-1 transaction.
“In 2023, I had to differentiate loan ABS from lease ABS and show why our product was safer,” explains Villa. “Now, I’m differentiating from other loan ABS issuers. Ashland Place loans have a relatively lower LTV compared to other issuers and I do not have any “high LTV” buckets as exceptions. We view this as a major credit positive and key to the structural integrity of this type of lending.”
The pandemic provided a hard lesson for lenders with high LTV loans, says Villa. “Covid showed that the lenders that were out with high LTVs tended to be the ones who ended up with the keys back because their borrower counterparts did not have adequate equity in the assets. The basic laws of economics say, given lower LTV structures, you’ll never end up with the aeroplane. In fact, in a limited-recourse loan structure, I never have in my career.”
Villa also points to the solid structural elements in their deals that make them cleaner and easier to manage — not least the fact that Ashland Place originates 100% of the loans. “We hold the pen on every document. Investors like that we’re not buying other people’s loans or documents. There’s no complication of inter-creditor agreements, and if there’s a problem, workouts are simpler and more streamlined.”
This focus on origination has been a core part of the company’s unique value proposition since its inception. Maintaining a clean book is central to Villa’s mission to bring well-structured, safer, and more attractive portfolios to market. Ensuring the portfolio is static is another key differentiator, reinforcing the emphasis on transparency and stability that investors value.
“We have continued to pursue a static pool structure for our ABSs which really resonates with investors. What investors see on day one is what they will have for the duration of the loan. If there's any prepayment, refinancing or extension, it comes out of the transaction,” explains Villa.
Other aviation loan ABS structures have more CLO-type structures in their transactions, with reinvestment capabilities where they can put new loans into the book. Villa prefers, and believes investors would rather know exactly what they are buying. The oversubscription is testament to that fact.
The APL 2025-1 portfolio marks a shift from the inaugural issuance, with a significantly younger weighted average asset age on the order of five years, compared to approximately ten years in 2023. The portfolio also reflects a more conservative approach to jurisdictional risk, in response to heightened geopolitical uncertainty. Over 70% of the underlying airline lessees are based in North America or Europe, with more than 80% located in developed jurisdictions. “That was by design,” says Villa. “As much as I talk about borrowers having equity in the assets, if they can’t get them out of the jurisdiction in a default situation – or if there are delays – that safety net kind of falls on its ear. I’d much rather fund an aircraft on lease to a tier-two airline in the US, Canada, or UK than in a more difficult jurisdiction.”
The loans in APL 2025-1 look very similar to the 2023 portfolio, with the same security elements in place, such as maintenance reserve traps and sponsor guarantees, but the underlying assets are newer and the loans have lower net LTVs with better margins. “On all fronts, this new transaction has been very attractive to investors,” confirms Villa.
Citi served as the sole structuring agent for APL 2025-1, and acted as joint lead bookrunner alongside ATLAS LP Partners, with Morgan Stanley joining as a joint bookrunner.
Vinson & Elkins served as legal counsel to Ashland Place, and Milbank served as legal counsel to Citi, ATLAS SP Partners and Morgan Stanley. Pivotal Corporate AMS will serve as Managing Agent.
Ashland Place continues to focus on originating asset-backed loans, and Villa reiterates the company’s ambition to be a perennial issuer of aviation loan ABS transactions. Despite a still quasi-constrained trading environment – marked by ongoing supply chain challenges and sluggish OEM deliveries – Villa remains committed to issuing loans with steely discipline, prioritising liquid assets and strong credits, and refusing to yield to competitive pressures in the aircraft market. “We’d love to be doing more, but we’re perfectly comfortable with the current cadence – though I do hope volumes pick up and return to pre-COVID levels,” Villa admits. “It’s a challenging trading environment, but we’re not going to pursue deals we don’t believe in. Maintaining manageable LTVs is foundational to our lending approach. When the competitive landscape pushes others to loosen those standards, deals start to drift from where they should be in terms of risk-reward. I’d rather do nothing than commit to a bad deal.”
Ashland Place is pushing ahead with origination and will shortly be expanding its team in Dublin to help pursue those additional trading opportunities, which are reviving as new deliveries speed up to the large lessors. “We always have more in the pipeline, and we expect to continue to be busy in the market.”