SKY Leasing (SKY) has closed its $663 million SLAM 2021-1 asset backed securitisation (ABS). The proceeds from the notes will be used to acquire a portfolio of 16 Airbus and Boeing aircraft valued at approximately $885 million. The portfolio features the youngest average aircraft age for an aircraft ABS ever issued with an average age of 1.6 years and a weighted average lease term of 11.1 years. The portfolio includes the highest concentration of next generation narrowbody aircraft for an aircraft ABS with 10 A321NEO aircraft in the portfolio. SKY will act as servicer for SLAM’s aircraft portfolio.
The offering consisted of two series of notes: $592.4 million Series A Notes with an interest rate of 2.434% and $70.7 million of Series B notes with an interest rate of 3.422%. The Series A notes have an initial loan-to-value (LTV) of 67.0% and were rated A1 by Moody’s Investor Services and A by Kroll Bond Rating Agency (KBRA) and the Series B notes have an initial LTV of 75.0% and were rated Baa1 by Moody’s and BBB by KBRA. Both the Series A notes and Series B notes have an initial expected maturity of 7.0 years and an initial expected weighted average life of 5.5 years based on the pricing case cash flow model. An affiliate of SKY acquired the E notes of SLAM.
“We are pleased that the SLAM portfolio attracted a diverse, global group of investors to achieve the lowest all-in yield ever for an aircraft ABS,” said Matthew Crawford, Head of Capital Markets at SKY. “The success of this transaction validates SKY’s investment approach, which enables our platform to continue to provide efficient capital solutions to our airline customers and delivering high quality portfolios to our capital partners.”
SKY expects to refinance its existing warehouse debt financing facility with proceeds from the SLAM transaction.
MUFG and Citi acted as joint lead structuring agents and joint lead bookrunners, Morgan Stanley acted as joint lead bookrunner and Natixis, Société Générale, BofA Securities and Deutsche Bank acted as joint bookrunners on the transaction. Natixis is the liquidity facility provider for the transaction. Vedder Price acted as legal counsel to SKY and Clifford Chance acted as legal counsel to the initial purchasers.
Meanwhile, at the Bernstein Strategic Decisions Conference, GE Chairman and CEO Larry Culp said that the company has made a lot of progress in its transformation to a simpler, stronger, high-tech industrial. Commenting that the AerCap transaction, announced in March, forms a part of that transformation, he noted that the US Department of Justice had completed its review of the deal in the US, and that he expects the transaction to close “later this year, early next year”.