GECAS vehicle Labrador Aviation Finance’s planned $709 million asset backed security (ABS) notes have received a preliminary A rating for the series A tranche and BBB for the series B portion form rating agency Kroll.
The A tranche has an initial principal of $603 million and a loan-to-value of 65%, while the $106 million B tranche has a LTV of 76.4%.
The notes mature January 2042.
Proceeds will be used to acquire 20 aircraft on lease to 16 airlines in 15 countries, ten Airbus A320 family jets, seven Boeing 737-800s, one A330-300, one A350-900, and one B777-300ER, according to S&P’s preliminary rating report.
The portfolio is valued at $928 million by Kroll. The weighted average remaining term of the initial lease contracts is approximately 7.3 years as of 31 October.
Lessees include Qatar Airways, Egypt Air, Garuda Indonesia and Myanmar National Airlines, according to Kroll.
Kroll notes in its report that with widebodies making up 35% of the portfolio’s value, there is moderate widebody aircraft exposure given that these aircraft have higher costs than narrowbody jets.
However, Kroll adds that the greatest widebody aircraft exposure in this portfolio, an A350-900 on lease to Qatar Airways, representing approximately 15.3% (by value), will be less than two years old as of the closing date and will have a remaining lease term of approximately 10 years - thereby decreasing some of the risk associated with widebody aircraft.
GECAS is acting as servicer for the transaction. Natixis is acting as liquidity provider, while Wells Fargo is trustee. Mizuho is the sole stricter and bookrunner, with Phoenix American Financial Services acting as managing agent, according to Kroll’s rating report.