The first securitisation of business jets has been launched by Global Jet Capital. The three classes of notes are being issued by Business Jet Securities (BJETS) with Global Jet Capital as the servicer.
Global Jet Capital, which is a Delaware limited partnership formed in 2014 by private investment funds managed by affiliates of The Carlyle Group, GSO Capital Partners, in partnership with FS Investments and AE Industrial Partners, entered into a sale and purchase agreement with GE Capital Corporation (GECC) in October 2015 to purchase a significant number of business aircraft related assets. A majority of the assets within the transaction were acquired from GECC as part of this purchase.
The three classes of notes in the $608 million portfolio consists of 67 business jets, representing 60 unique obligors with a remaining term of approximately 62.9 months and an aggregate asset value of approximately $741.5 million.
The transaction features elements observed in equipment lease and loan transactions, as well as commercial aircraft ABS transactions.
The transaction comprises $496.81 million A notes with an initial loan-to-value of 67% and an A rating from Kroll Bond Rating Agency; $74.15 million BBB-rated B notes with an LTV of 77%; and a $37.07 million BB-rated C tranche with an LTV of 82%. All tranches of notes have an anticipated repayment date of Feb. 15, 2023 with the legal final maturity of Feb. 15, 2033.
A and B notes amortise on an 11.5 year straight-line schedule, while class C notes amortise on a five year straight-line schedule.
There are some interesting restrictions in this structure, notably the fact that none of the aircraft in the portfolio can be re-leased if they are returned from their current operator, they must be disposed of. Operating leases make up 63.3% of the pool by aggregate asset value (35.2% are loans and 1.5% are finance leases), and in this situation the issuer is required sell an aircraft for an amount at least equal to the “Target Disposition Proceeds”.
For all aircraft subject to operating leases, no more than 20% (by appraised value) may be owned by the Issuer and not subject to a lease or binding commitment to enter into a lease. No additional assets are permitted to be purchased or re-leased by the issuer. Only 25.0% of the Aggregate Asset Value may be extended for a period not to exceed 24 months. In each case, the term of any loan or lease may only be extended once. Any extension or refinancing may not reduce the outstanding principal balance of the loan. There are minimum LTV limits for each of the five years of the deal: prior to the first anniversary of the closing date, the LTV shall not exceed 75.0%; year two the LTV shall not exceed 71.0%; year 3 the LTV shall not exceed 67.0%; year 4, the LTV shall not exceed 63.0%; year 5 through month 54, the LTV shall not exceed 60.0%; and in month 55, the LTV shall not exceed 55.0%.
Citi is the indenture trustee and account bank on the deal. The security trustee is the Bank of Utah, with 1st Source Bank named as the backup servicer.