With Thunderbolt II, Air Lease Corporation has succeeded in its aim of evolving the aviation asset backed securitisation (ABS) product to be more liquid and more appealing to a broader stable of investors on both the equity and the debt side of the transaction.
The Thunderbolt II Aircraft Lease (Thunderbolt II) ABS structure, which secures a portfolio of narrowbody and widebody jet aircraft with an average age of 8.0 years on leas to 16 lessees based in 15 countries, includes two series of Fixed Rate Notes and equity in the form of Aircraft Portfolio Shares (APS), comprised of 90% Global Aircraft Portfolio Shares (GAPS) and 10% Certificated Aircraft Portfolio Shares (CAPS). The CAPS were purchased by an investment vehicle controlled by ITE Management, and ALC retained 5% of the equity as planned.
ALC remains as servicers and portfolio manager for the aircraft. ALC estimates that the process of transfer and sale of the majority of aircraft will occur progressively during Q3 and Q4 2018.
"With the closing of Thunderbolt II, Air Lease has further expanded our strategic management platform that allows us to extend our existing airline customer relationships into the midlife aircraft space," said Ryan McKenna, Head of Strategic Planning of Air Lease Corporation. "This innovative structure has transformed the Aircraft ABS market into an investible and tradeable asset class for a broader set of both equity and credit buyers. Thunderbolt II has introduced the first 144A / Reg S Aircraft Portfolio Shares to the market in a broadly distributed offering process where both the equity and debt securities were marketed and issued concurrently. When pairing these innovations with the earnout structure developed in Thunderbolt I that aligns the interests of ALC with our investors, the response from the market was overwhelming. There were 56 orders and oversubscription across all the three classes of securities, highlighted by 23 unique investors and 6.7 times oversubscription for the equity."
For the notes, BofA Merrill Lynch acted as global coordinator, BofA Merrill Lynch, Mizuho Securities and Goldman Sachs acted as joint lead structuring agents and BofA Merrill Lynch, Mizuho Securities, Goldman Sachs, Citigroup, BNP Paribas and MUFG acted as joint lead bookrunners.
For the APS, BofA Merrill Lynch acted as global coordinator, BofA Merrill Lynch, Mizuho Securities and Goldman Sachs acted as joint lead structuring agents and BofA Merrill Lynch, Mizuho Securities, Goldman Sachs and Citigroup acted as joint lead bookrunners.
Hughes Hubbard & Reed acted as US counsel to ALC and the Issuers, and Milbank, Tweed, Hadley & McCloy acted as US counsel to the global coordinator, the joint lead structuring agents and the joint lead bookrunners. EY acted as US and Irish tax advisors. Walkers acted as Cayman Islands counsel and A&L Goodbody acted as Irish counsel. Vedder Price acted as counsel for ITE.
Canyon Financial Services will act as the managing agent for the Issuers. Citibank will act as trustee, security trustee, paying agent and operating bank for the notes and as transfer agent, paying agent, operating bank and registrar for the APS. Citibank will also act as the liquidity facility provider. DealVector will provide certain investor services for the holders of the notes and APS.
A full analysis of Thunderbolt II based on an interview with the main deal participants will feature in the forthcoming issue of Airline Economics, which also features the 40 under 40 winners for 2018, including the announcement of this year’s Airline Economics Future Leader Award. Subscribe here to ensure you don’t miss out on your copy of this important issue.