Willis Lease Finance Corporation (WLFC) has priced its WEST IX aviation asset-backed securitisation (ABS) deal earlier this week.
The $392.9 million deal is the engine lessor's 10th ABS transaction, as well as its second of 2025.
The deal's A tranche amounts to $337.4 million, while the subordinate B note holds the remaining $55.5 million.
The Series A notes have a fixed coupon of 5.159% and yield of 5.215%. The tranche has a spread of US Treasuries plus 155 basis points and a 73% loan to value (LTV) ratio. The spread tightened from its previous A tranche in its first ABS issuance of the year, down from 165 basis points in the WEST VIII deal.
The Series B notes have a 5.696% fixed coupon and a yield of 5.765%. The tranche has a spread of 210 basis points and an LTC of 85%. This also tightened from the 215 basis points in its WEST VIII B notes.
The issuance was relatively similar in structure to WEST VIII, though with this most recent having slightly higher LTVs. In the previous issuance, LTVs were 72.1% and 82% in its A and B notes, respectively.
The A tranche was rated A by KBRA and Fitch. The B tranche was rated A- by Fitch, which supported the pricing of this issuance.
The notes are expected to mature in six years, with a repayment date anticipated for December 2031. The notes have an expected weighted average life of 4.1 years and a final legal maturity of 25 years.
Proceeds will be used to refinance its existing WEST III and WEST VII transactions, as well as acquire a portfolio of 49 assets.
The portfolio consists of 46 narrowbody engines, one regional jet engine, and two narrowbody airframes on lease to 19 lessees across 14 jurisdictions.
The weighted average remaining term of the initial lease contracts is around 2.5 years, according to KBRA. This includes off-lease assets in the mix. The portfolio has an initial value of around $462.3 million.
A $2.6 million security deposit will be funded at closing and ongoing targeted amounts will be based on the amount of leases expiring within four months, KBRA said. The transaction’s structure also includes a liquidity facility sized to nine-months of interest due on the notes.
The structure includes a minimum number of assets test, requiring Willis Lease to use excess cash to fully pay down the notes in the event that it owns less than eight assets and note principal falls below one-third of its scheduled level.
The portfolio’s engine assets include 15 CFM56-7B engines, 11 PW1100G engines, nine CFM56-5B engines, nine V2500-A5 engines, two LEAP-1B engines, and one CF34-10E engine. The two airframes are one A320ceo and one A320neo.
The transaction contains two PW1100G engines subject to a finance lease with VietJet as opposed to typical aviation ABS deals that usually comprise of assets on operating leases.
The top three lessees include Delta, VietJet, and Air India which hold 11.2%, 9.5%, and 8.9% of the portfolio by value, respectively.
Joint structuring agents and joint lead bookrunners were Bank of America and BNP Paribas. This marked BNP Paribas' first active ABS structuring lead with Willis.
Bank of America is also the liquidity facility provider. US Bank National Association is acting as trustee. Credit Agricole, Deutsche Bank, and MUFG acted as bookrunners on the deal.