Griffin Global Asset Management has marketed its inaugural aviation asset-backed securitisation (ABS) deal, GGAM 2025-1.
The $1.245bn deal’s proceeds will be used to acquire an initial pool of 25 aircraft.
The deal includes $1.12bn Class A notes and subordinated $125 million Y notes, with a legal final maturity date of September 30, 2060.
Fitch Ratings expects to give the A tranche an A rating and the Y tranche a BB rating.
The A tranche has a loan-to-value (LTV) ratio of 77.6% and a collateral LTV of 77.1%.
“With an LTV of 77.1% on class A, the leverage is high for a senior note,” Fitch said in its report. “The transaction is sequential pay with class A interest and principal senior to the class Y note. The A note has a 14-year mortgage-style amortization profile.
The Y tranche has an LTV of 86.3% and collateral LTV of 85.7%.
“The Y note will not have an amortization schedule and will, instead, have principle paid down only with excess cash flow,” Fitch said.
The Y note has an initial $3 million interest reserve and will replenish to cover interest shortfalls.
The initial pool includes 20 narrowbodies and five widebody aircraft. By value, the portfolio consists of 24% 737-8s, 12% A350-1000s, 10% A350-900s, 8% 737-800s, 8% 737-9s, 8% 787-9s, 8% A330-900, 7% A320neo, 6% 787-8, and the remaining 9% for other assets.
The pool has a weighted average of 4.1 years, largely consisting of young aircraft. Fitch’s report notes that the aircraft are in “high demand”. Additionally, all five widebodies are new-technology types that benefit from the current widebody supply shortage.
As a result, Fitch said the widebody concentration isn’t considered a major risk. Overall, 17 of the 25 aircraft are new-technology aircraft.
Two aircraft have not yet been delivered from the manufacturer.
The top three jurisdictions are Europe at 43.1%, Asia Pacific at 23.7%, and the Americas at 17.7%. Fitch noted that the aircraft placed in Europe were all placed in favourable jurisdictions within the region.
The ratings agency said the pool is also well-diversified in terms of lessee concentration. British Airways and Air France are the only two lessees to have an exposure over 10%, at 11.8% and 10% respectively. Additionally, both airlines are investment grade.
In Fitch’s report, it noted that the weighted average credit rating for the lessee pool is between B- and B, which is similar to other aircraft ABS transactions.
The weighted average remaining initial lease for the pool is 8.7 years.
The joint lead structuring agent on the deal is Mizuho Securities, USA branch.