GE, Avolon and now Fan, with one more engine asset backed securitisation (ABS) deal to come soon, there are signs the ABS product is re-emerging albeit very slowly and with varying success. Deal volume is low and so too is the investor base for ABS deals – there were very few investors on the Avolon and Fan deals – but still deals are being done even if at a discount to par. For now it seems, other aircraft and engine lessor may not be too encouraged by the deals that have closed and many of the larger lessors are receiving much more competitive pricing using other capital markets issuance, even unsecured notes, to be considering using the ABS product any time soon. That said, the structure is attractive for lessors seeking to sell a portfolio of older aircraft, which is what GE succeeded in doing and sold its deal at a premium to par back in January. Avolon is expected to sell the E note on its ABS deal in the future but is likely to be waiting for the right time.
Whisper it… could the ABS market be coming back?
