SKY Leasing priced its $503 million aviation asset backed securitisation (ABS) transaction SLAM 2025-1.
The transaction's A tranche was priced with a 5.807% coupon and a 5.878% yield. The deal has a spread of Treasuries plus 180 basis points. The spread is higher than other A notes seen in recent aviation ABS transactions this year. However, the spread was lowered from initial guidance of between 185 and 195 basis points. Pricing was tightened after the deal attracted strong investor demand.
The deal has a loan to value (LTV) ratio of 73%. In addition, the deal's weighted average life (WAL) is 5.20 years.
Proceeds from the notes will be used to acquire a portfolio of 19 assets, consisting of 18 narrowbodies and one widebody on lease to 10 lessees located in 10 jurisdictions. As of the end of March, the weighted average age of the portfolio is around 5.3 years and the weighted average remaining term of the initial lease contracts is around 7.2 years.
SLAM 2025-1 has an anticipated repayment date of May 2032 and a legal final maturity date of May 2050.
The notes were rated A2 and A by Moody's and KBRA, respectively.
The narrowbodies consist of five A321neos, one 737 MAX 8, two A321-200s, six A320-200s, three A319-100s, and one 737-800. The widebody is a 787-9 on lease to AeroMexico.
New technology aircraft make up 64.8% of the portfolio by value. The weighted average age of these aircraft are around 2.4 years with an average remaining lease term of 7.6 years.
The top three lessees are Wizz Air, IndiGo, and LATAM, which make up 21.1%, 18.1%, and 11.6% of the portfolio by value, respectively. Collectively, the top three lessees represent 50.8% of the portfolio, which is higher than other recent aviation ABS transactions. In terms of geographic concentration, the top three jurisdictions— Hungary, India and Chile — align with the top three lessee concentration.
The portfolio includes one 737 MAX 8 on lease to GOL, which makes up around 8.4% by value, which filed for bankruptcy in 2024. Additionally, two A321-200s are on lease to Spirit Airlines, which emerged from bankruptcy at the start of the year.
MUFG, Citi, and BNP Paribas acted as joint lead structuring agents. Joint bookrunners were Bank of America, Deutsche Bank, Fifth Third, Morgan Stanley, Natixis, PNC, and SocGen.
The transaction marks the fourth aviation ABS issued by SKY Leasing.