Aircraft investment firm Castlelake, formerly known as TPG Credit, has issued its inaugural aircraft securitisation, Castlelake Aircraft Securitisation Trust 2014-1.
The $515.6 million non-recourse asset-backed securitisation (ABS) marks the first time a transaction features turboprop aircraft.
Kroll Bond Rating Agency assigned preliminary ratings of “A (sf)” to the $303.5 million series A-1 and $50 million series A-2 loans tranches, and “BBB (sf)” to the $162 million series B loans tranche.
The maturity date is 15 February 2029. Goldman Sachs acted as sole lead arranger, structuring agent and liquidity provider in the transaction. Wells Fargo Bank Northwest is the Facility Agent and Security Trustee.
The ABS transaction is supported by a pool of 79 aircraft, which represents approximately 58% of Castlelake’s managed aircraft fleet by number of aircraft. The aircraft are initially leased to 26 lessees located in 17 countries. The appraised fleet value is $736.5 million.
With an approximate weighted average age of 17.5 years, the Castlelake 2014-1 fleet is significantly older than the younger vintages included in recent lease securitisations.
The weighted average remaining term of the initial lease contracts is approximately 4 years, shorter than typical maturities in aircraft portfolios with younger aircraft which have longer initial lease terms. The shorter remaining tenor for existing leases is more appropriate for the Castlelake 2014-1 portfolio, says Kroll Bond Rating Agency, as it provides the flexibility to dispose of vintage aircraft with limited re-leasing prospects early in the transaction, in line with Castlelake’s business model. Younger aircraft with longer useful lives, prolific in recent lease securitizations, are typically re-leased for a second term in Kroll Bond Rating Agency's cash flow analysis before they are sold at the end of their economic lives, assumed to be 25 years. Importantly, the remaining lease term extends beyond the 3.4 year weighted average life on the series A loans and 3.5 years on the series B loans.
The collateral pool includes 19 aircraft types across three fleet categories: widebody (24% of the initial pool), narrowbody (22%) and turboprop (54%).
The portfolio includes two Airbus A319s, two A321s, two A330-200s, two A340-300s. There are also two Boeing 737-300s, two 737-400s, two 737-800s, eight 757-200s, six 767-200ERs, six 767-300ERs and a single 777-200ER in the transaction.
The turboprop portion includes one ATR 42-500, three ATR 72-500s, seven Bombardier 8-100s, 18 dash 8-200s, 11 dash 8-300s and two Q400s.
The transaction has greater exposure to developed markets and US lessees. North America accounts for 31.8% of the collateral, and Europe for 31.3%.
Adjusted for maintenance, the initial loan to value of the series A loans is 51.7%. The initial LTV of the series B loans is 75.4%.
Kroll Bond Rating Agency says due to the higher yielding nature of older aviation assets, and the high lease rate factors associated with the Castlelake 2014-1 fleet, the transaction is expected to generate significant cash flows from the underlying leases relative to lease securitisations backed by younger aircraft.