Merit AirFinance, the aviation lending company formed by Castlelake last year, has priced an $817 million loan asset-backed securitisation (ABS), MERIT 2026-1, marking the company's first issuance under its MERIT shelf.
The MERIT 2026-1 offering consists of $461 million of Class A notes assigned AAA ratings by both Fitch Ratings Service and Morningstar DBRS. Other tranches were retained by private investors. The notes carry a fixed coupon of 4.852% yielding 4.9%, and will be used to finance a diversified portfolio of 97 secured aviation loans from 10 distinct facilities with 34 underlying lessees. The portfolio has a weighted average asset age of 10.8 years and a weighted average loan maturity of 6.8 years.
At pricing on March 10, 2026, MERIT 2026-1 achieved the second lowest Class A pricing spread in aviation ABS/CLO history, according to bank reports, underscoring strong investor demand and effective execution despite recent market volatility.
"We are grateful for the robust investor interest in this transaction, especially given the current backdrop of market volatility," said Patrick Mahoney, president of Merit. "We believe the pricing outcome reflects the quality and diversification of the underlying portfolio, as well as the strength of our investor relationships, and we look forward to building on this foundation as we continue to scale the Merit platform and seek to establish ourselves as a programmatic issuer."
Merit recently announced it had closed or committed to approximately $1.3 billion of financing across 11 transactions since the company's launch in August 2025. The company stated that its successful execution of MERIT 2026–1 further supports its strategy to scale its aviation lending platform by providing tailored financing solutions to global airlines and leasing companies.
Merit will act as servicer for the transaction. BNP Paribas is the lead structuring agent and joint lead bookrunner alongside Goldman Sachs. The notes were offered only to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S.