Another ABS deal: BBAM launches Horizon 2018-1

victoria@aviationnews-online.com
By victoria@aviationnews-online.com November 6, 2018 09:48

Another ABS deal: BBAM launches Horizon 2018-1

The seemingly endless popularity of the aviation asset backed securitisation (ABS) product continues with the launch of a new deal from BBAM Aviation Services. The $612.1 million Horizon Aircraft Finance I ABS is offered in three tranches of notes secured on a portfolio of 29 narrowbody aircraft, which have an average age of 9.8 years and a weighted average remaining lease term of 3.4 years.

The remaining lease term is low compared to other ABS deals that have closed recently and BBAM has stressed the efforts it is making to extend certain leases and remarketing others that are coming off lease in the short term, specifically for the ten aircraft that are coming off lease in 2019. For these ten aircraft, BBAM states that it has two lease extensions agreed, letters of intent (LOI) signed with new lessees for three of the aircraft, and confirming that it is in discussions with new lessees for the remaining five aircraft.

The aircraft are on lease to 21 lessees located in 19 countries. The three largest lessees by aircraft value are Travel Service, Eastar Jet and Ryanair, which represent approximately 11.7%, 9.6% and 8.3%, respectively (29.6% in total). However, 18.6% of the portfolio by value or five of the aircraft are on lease to airlines that are a part of the AirAsia Group: two with Thai Air Asia, two with Philippines Air Asia and one with Indonesia Air Asia, which were acquired as part of BBAM’s acquisition of a larger portfolio of aircraft from AirAsia Group.

The portfolio has an initial value of approximately $737.7 million, based on the average of the half-life base values provided by three appraisers as of May 2018 and adjusted for maintenance conditions as determined by Alton Aviation Consultancy. Comparatively, the portfolio has an aggregate maintenance-adjusted current market value of approximately $720.5 million.

The $476 million A notes with an initial loan-to-value ratio of 64.5% are rated A by Kroll Bond Rating Agency (KBRA); the $91 million B notes have an LTV of 76.9% and are rated BBB; while the $45 million C notes have a LTV of 83% and are rated BB.
The Series A Notes and the Series B Notes amortize on a 13-year straight-line schedule. The Series C Notes amortize on a 7-year straight-line schedule.

Mizuho, Citi and Deutsche Bank are the lead structuring agents, with BNP Paribas providing the nine-month liquidity facility. UMB Bank is the security trustee, operating bank and trustee. Maples is the fiduciary agent.

BBAM will remain as the servicer, with affiliates of the company purchasing a minority portion of the equity in Horizon that will be subject to an equity lock-up agreement until December 15, 2025.

victoria@aviationnews-online.com
By victoria@aviationnews-online.com November 6, 2018 09:48