GECAS and Oz Management, which is the dedicated asset manager, have closed STARR 2019-1 asset backed securitisation (ABS).
STARR II 2019-1 issues $474 million of debt in three tranches of notes: $382 million A notes, rated A by Kroll Bond Rating Agency (KBRA), with an initial LTV of 64.9%; $69 million B notes, rated BBB, with an LTV of 76.6%; and $23 million C notes, rated BB with an LTV of 80.5%.
The notes are secured on a portfolio of 20 aircraft – seven 737-800s, four A320-200s, three A321-200s, three A319-100s, two 737-900ERs and one 737-700 – which are on lease to 13 lessees located in 11 countries, with an initial weighted average aircraft age of 5.9 years and a weighted average remaining lease term of approximately 6.6 years. The portfolio has an initial value of approximately $588.7 million, based on the average of the half-life base values provided by three appraisers and adjusted for maintenance conditions.
GECAS acts as servicer for the transaction, and an affiliate of GECAS will be acquiring a small minority percentage of the equity in STARR II. No doubt responding to criticism concerning high fees in the STARR I transaction, in STARR II the asset manager fee has been reduced and the location of the waterfall has been changed.
Deutsche Bank is again the lead structuring agent and lead bookrunner. Citi and Goldman Sachs are joint structuring agents and joint book runners. Credit Agricole-CIB (CA-CIB) and Natixis are also joint bookrunners. CA-CIB is providing the nine-month liquidity facility. Since the aircraft are yet to be acquired, standby letters of credit are supplied by CA-CIB and Natixis. Citi is the security trustee, operating bank and trustee. Canyon Financial Services is acting as managing agent.
The deal is a repeat of the STARR 2018-1 transaction, which was the first aircraft portfolio purchase vehicle structure to include 144A tradeable equity and a dedicated asset manager for equity investors. GECAS will continue to service the portfolio.