BOC Aviation is selling a 17-aircraft portfolio of mostly mid-life narrowbodies via a $548 million securitisation called Silver Aircraft.
The deal, which was launched this morning according to a Kroll Bond Rating Agency (KBRA) pre-sale report, shows the securitisation will be offered in three tranches. KBRA and Fitch Ratings have assigned the tranches the following ratings: the $443 million series A notes "A", the $73 million series B notes "BBB" and the $32 million series C notes "BB".
BOC Aviation will not be retaining any of the equity but as servicer will receive 20% of the equity cashflow after the E-note holders receive an effective internal rate of return of 12%.
BOC Aviation closed its $808 million inaugural securitisation - SAIL - in 2015, backed by a pool of 24 aircraft. At the time, it was reported that asset manager Och Ziff purchased the E-note in that transaction.
The portfolio backing the Silver Aircraft transaction consists of 15 next generation narrowbodies and two Boeing widebodies, accounting for nearly one-third of the portfolio value.
Fitch notes that the Boeing 787-8 and Boeing 777-300ER are “prone to higher transition costs” and “are the two largest single aircraft and together comprise 32% of the pool”.
While KBRA says it accounted for the significant widebody exposure of the two Boeing widebodies “by examining various default and sales timing for this aircraft, as well as applying an additional haircut stress to the lease rates and sales proceeds in different scenarios with respect to this aircraft”.
“In these scenarios, the transaction’s cash flow was sufficient to support the rated notes,” writes KBRA.
As of 30 April weighted average age of the fleet was about 6.0 years with a weighted average remaining lease term of approximately 5.4 years.
Deutsche Bank is sole structuring agent and lead bookrunner while HSBC will be liquidity facility provider, the KBRA report says. BOC Aviation is servicer.
BOC Aviation confirmed the sale in a stock exchange filing issued today.
Source: Cirium Dashboard