WEST III rated by Kroll

Eleanor Steed
By Eleanor Steed July 21, 2017 12:36

WEST III rated by Kroll

As announced yesterday, Willis Lease Finance has issued its fourth asset backed securitisation with Willis Engine Structured Trust III (WEST III), which issued two-tranches of notes to secure a portfolio of 56 engines. The deal is being arranged by BofA Merrill Lynch, Deutsche Bank is acting as the trustee, operating bank and security trustee, while BNP Paribas is providing the nine month liquidity facility. Willis remains as the servicer and administrative agent, while Wilmington Trust is the owner trustee.

Kroll Bond Rating Agency (KBRA) has assigned preliminary ratings to two classes of notes. The 293.7m A notes have an initial leverage ratio of 70% and are rated A by KBRA; and $42m B notes with an LTV of 80% are rated BBB by KBRA.

The portfolio of 56 engines includes 51 engines that are on lease to 27 lessees located in 20 countries, along with five engines currently not subject to a lease agreement. The majority of the portfolio is comprised of CFM56-7B engines (24 engines) and CFM56-5B types (12 engines). The portfolio has an initial value of approximately $419.6 million, based on the average of the half-life base values provided by three appraisers as of May 31, 2017 and adjusted for maintenance conditions as determined by ICF SH&E, Inc. as of April 2017.

Key structural features of WEST III include a scheduled amortization profile, where the notes amortize 4.5% for the first four years of the transaction and then amortize 5.5% per year through the expected final payment date. Supplement principal payments are required for any aircraft that are added as replacement assets prior to the expected final payment date. At closing if the deal, the initial funding for the maintenance reserve account will be approximately $5.0 million and will build to a $10.0 million floor. The structure also incorporates rapid amortization events to be triggered in certain instances.

Eleanor Steed
By Eleanor Steed July 21, 2017 12:36