AWAS acquires one A320 and one 737-800
20th March 2013
Apollo PK Air Management — an affiliate of PK AirFinance — has priced its first asset backed securitisation (ABS) of 2025. PK ALIFT Loan Funding 6 LP (PKAIR 2025-1) also represents the fourth aviation ABS serviced by the company.
The transaction totals $728.9 million and consists of A-F, A, B, C, and D tranches and the tranches have a legal maturity date of November 2042. The A-1 notes were preplaced in loan format. The B, C, and D notes were preplaced with PK AirFinance affiliates.
The A-F floating rate tranche consists of $94 million and an initial loan to value (LTV) ratio based on loan balance of 67.4%. KBRA and DBRA Morningstar rated it AAA. The tranche is expected to have final maturity in November 2032.
The A tranche consists of $423 million and a loan LTV of 67.4%. KBRA and DBRA rated it AAA. The notes were priced with a 5.365% coupon and a yield of 5.425%. In addition, the tranche has a spread of US Treasuries plus 160 basis points. The A tranche's subscription reached 2.15x, showing a strong investor support despite the market's current volatility. The expected final date is December 2031.
The B tranche consists of $60 million and a loan LTV ratio of 75.2%. KBRA rated it AAA and DBRA rated it AA. The expected final date is December 2033. The C tranche consists of $110.5 million and a loan LTV ratio of 89.6%. KBRA rated it A. The expected final date is August 2035. The D tranche consists of $41.4 million and a loan LTV ratio of 95%. KBRA rated it BBB-. The expected final date is October 2035.
Proceeds for the notes will be used to acquire a portfolio of 41 loan facilities comprised of 114 loans. As of March 2025, the portfolio has an initial loan balance of around $767.4 million, an average collateral balance of $6.7 million, and a weighted average remaining loan term of approximately 6.1 years.
The collateral obligations are secured by 71 narrowbody aircraft, 10 freighter aircraft, four widebodies, 12 regional jet aircraft, two turboprops, and 15 engines. The assets are on lease to 50 lessees located in 32 jurisdictions. As of March 2025, the assets have a weighted average age of 10.8 years – excluding the engines.
The three largest lessees by loan balance are Ethiopian Airlines, WestJet, and SunExpress, which represents 9%, 8%, and 6.2%, respectively or 23.2% in total. The three largest geographic concentrations by loan balance are the US, Turkey, and Ethiopia at 15.4%, 11.1%, and 9%, respectively, or 35.5% in total. The A320-200 makes up around 24.4% of the assets, while the 737-800 makes up 21.1%.
The transaction contained two structural changes compared to previous PKAIR deals, including the introduction of a reinvestment period that allows up to 10% of the initial loan balance to be reinvested if any underlying loans are prepaid. This structural change is more common in collateralised loan obligations (CLO). The other change introduces a principal payment structure that allows leftover principal cash to go to equity once the LTV reaches 92.5%. In prior PKAIR deals, this equity was only released from the interest.
BNP, Mizuho and RBC acted as active joint bookrunners alongside Apollo Global Securities in the active syndicate. RBC acted as co-structuring agent alongside Redding Ridge. SMBC acted as a passive bookrunner. Co-managers on the transaction were Wells, PNC, and Blockstone Securities.