Large numbers of aircraft coming off lease and late payments have led Kroll Bond Rating Agency to put on Elix's 2017 securitisation PROP 2017-1 on watch downgrade.

Late payments have caused lower than expected cash flows while the servicer is looking to remarket about 27% of the portfolio in 2018.

The deal, which financed the purchase of 63 turboprops in February 2017, has about 25% of the portfolio coming off lease with Piedmont Airlines and CommutAir returning a large number of aircraft this year.

Additionally, three Bombardier Q400s that were on lease to now defunct Island Air have been re-leased with long-term leases to Jumbojet and WestJet.

"Since the transaction closed, total cash flow available for debt has been less than anticipated relative to KBRA’s initial base case," says KBRA in a report on 6 April. Nevertheless, PROP 2017-1 remains current on interest and scheduled principal payments.

Servicer Elix has optioned to make equity payments covering scheduled principal and interest on the Series C Loans for the January, February, and March payment dates, scheduled principal on the Series B Loans for the March payment date and part of the scheduled principal on the Series A Loans for the March payment date, according to KBRA.

KBRA will monitor the transaction to determine what further rating actions are warranted.

Source: Cirium Dashboard