SKY Leasing has closed an issuance of $569.5 million of secured notes by SLAM 2024-1 and SLAM 2024-1.
SLAM expects to use a portion of the proceeds of the notes to acquire a portfolio of 22 Airbus and Boeing aircraft valued at approximately $825 million. The portfolio features an average age of 4.8 years and a weighted average lease term of 7.3 years, with a significant focus on narrowbody aircraft (88%) and next generation aircraft (70%). SKY will act as servicer for SLAM’s aircraft portfolio.
“We are thrilled that the SLAM portfolio attracted a diverse, global group of investors, resulting in 2 x oversubscription. This broad distribution validates our ability to construct attractive portfolios with thoughtful structuring for our debt partners,” said Matthew Crawford, co-chief investment officer at SKY.
Crawford continued: “The success of this transaction underscores SKY’s investment approach, enabling us to continue providing efficient capital solutions to our airline customers and delivering high-quality portfolios to our investment partners.”
The offering consisted of one series of notes, $569.540 million series A notes with an interest rate of 5.335%. The series A notes have an initial loan-to-value (LTV) of 69% and were rated A2 by Moody’s and A by Kroll Bond Rating Agency (KBRA). The series A notes have an initial expected maturity of 7 years and an initial expected weighted average life of 5.25 years based on the pricing case cash flow model. Affiliates of SKY acquired the E Certificates of SLAM.
MUFG and Deutsche Bank acted as joint lead structuring agents and joint lead bookrunners, BofA Securities acted as joint structuring agent and joint lead bookrunner and BNP PARIBAS, Citigroup, Fifth Third Securities, Morgan Stanley, PNC Capital Markets LLC and SOCIETE GENERAL acted as joint bookrunners on the transaction.
Natixis is the liquidity facility provider for the transaction. Vedder Price P.C. acted as legal counsel to SKY and Milbank LLP acted as legal counsel to the initial purchasers.
SKY expects to refinance its existing warehouse debt financing facility with proceeds from the SLAM transaction.