PK AirFinance has priced PKAIR 2026-1 yesterday (February 5) — the first aviation loan asset-backed securitisation (ABS) deal of 2026.
The $832 million deal includes an A tranche along with three subordinate tranches, as well as a floating rate tranche.
The deal has a legal final maturity date of September 2043.
The Class A $462 million tranche was rated AAA by Fitch and DBRS, with a 4.614% coupon and 4.658% yield. Spread for the yield was treasuries plus 105 basis points. This came in tighter than initial pricing guidance, which was at around 125 to 130 basis points. Additionally, the tranche came in 25 basis points tighter than its previous issuance, PKAIR 2025-2, which priced at 130 basis points.
The transaction was oversubscribed between 7.9x and 11.3x at peak, which lead to the pricing tightening.
The A tranche has a weighted average life (WAL) of 3.67 years.
The $132 million A-F floating rate tranche — not offered to investors — has a WAL of 2.51 years.
The A tranches have an loan to value (LTV) ratio on loans and metal of 66.9% and 44.6%, respectively.
The $56 million B tranche was rated AA by both agencies and has a WAL of 3.98 years. The tranche has a 4.790% coupon and a 4.838% yield, with a 120 basis point spread. LTV on loans and metal for the tranche was 73.2% and 48.8%, respectively.
The $118 million Class C tranche was rated A by DBRS, and no rating given by Fitch, with a WAL of 4.11 years. The tranche has a coupon of 4.999% and a yield of 5.051%, with a spread of 140 basis points. The tranche has an LTV on loans and mental of 86.5% and 57.6%, respectively.
The $64 million Class D tranche, with a coupon of 5.597% and a yield of 5.662%, was rated BBB by DBRS. The tranche has a spread of 195 basis points and a WAL of 4.73 years. The tranche's LTV on loans and metals was 93.7% and 62.4%, respectively.
The portfolio is secured by 101 aircraft loans (47 loan facilities) across 44 lessees in 27 countries. The pool is made up of 60% narrowbodies, 16% freighters, 15% widebodies, and 9% engines. The weighted average of the assets are 9.9 years.
The deal includes several credit-enhancing covenants such as interest coverage, weighted-average life and asset coverage tests, with shortfall coverage providing protection for interest expenses and prepayment premiums.
The deal saw over 10 investors participating in multiple classes, with confidence growing in the aircraft loan market and PK AirFinance.
Mizuho — a joint bookrunner in the deal — noted that investor participation has grown significantly with each subsequent transaction.
Other joint bookrunners include RBC, BNP Paribas, SMBC Nikko, and Apollo Global Securities.
The deal comes amid two recent aviation ABS deals, including High Ridge Aviation's debut ABS deal, Phantom 2026-1, totalling $603.2 million, and Perseus Aviation's $680.11 million ABS deal, MAPS 2026-1.