Engine lessor Willis Lease Finance Corporation (WLFC) has mandated its $596 million aviation asset backed securities (ABS) deal WESTF 2025-A on June 3, 2025.
The deal contains two tranches consisting of A and B notes. Both tranches have an anticipated weighted average life (WAL) of 5.06 years, an anticipated repayment date of June 2031 and a legal final maturity date of June 2050.
The $524 million A notes are expected to be rated A by Fitch and KBRA. The tranche is guided to have an initial loan to value (LTV) ratio of 72.1%.
The $72 million B notes are expected to be rated BBB by KBRA and A- by Fitch. The tranche is guided to have an initial LTV ratio of 82%.
A portion of the proceeds from the notes will be used to refinance the existing WEST IV transaction and acquire a portfolio of 64 assets: 62 engines and two airframes.
More specifically, the portfolio includes two narrowbody airframes, four widebody engines, six turboprop engines, and the majority share of the portfolio including 52 narrowbody engines. All are on lease two 24 lessees located in 18 jurisdictions. There are five narrowbody and one turboprop engines currently off lease. The weighted average remaining term of the initial lease contracts, excluding the off-lease assets, is around 1.9 years.
Next generation assets comprise of 76% of the portfolio, or 31 engines. Of the portfolio, 18 were the Pratt & Whitney geared turbofan (GTF) PW1100 engine family, which continue to be impacted by inspections regarding the powdered metal contamination. “However, 12 were manufactured in 2024 and are unaffected by the recall,” read KBRA in its report. “The related issues require payment should additional recalls occur and during periodic inspections.”
KBRA added: “The portfolio primarily consists of phase I engines (75.8% by value), with the remainder in phase II (23.5% by value). These engines have stronger near-term re-leasing prospects, which KBRA views as a credit positive.”
The portfolio does not include any “phase III” engines, which assets nearing the end of their lifecycle.
The top three lessees are International Aero Engines (IAE) at 23.9%, JetBlue at 9.4%, and Delta at 7.1%. These three lessees represent 40.5% of the portfolio by value. The top three countries are the US at 46.7%, Ireland at 6.4%, and Spain at 4.7% — representing 57.9% of the transaction. KBRA said both the lessee and jurisdiction concentration are higher than other comparable transaction it has observed.
Five engines, equating to 4.4% by value, are on lease to Air India.
“On May 10, 2025, India and Pakistan agreed to a cease fire following the most intense period of violence between the two countries in two decades,” said KBRA. “The assets in question are covered by insurance and reinsurance arrangements (including war risk insurance) with counterparties that each have credit characteristics commensurate with investment grade rated entities, providing protection in the event of asset damage or loss.”
The portfolio does not have exposure to Israel, Russia, or Ukraine and the transaction's concentration limits do not allow for future lessees in the latter two jurisdictions.
The portfolio of engines totals 15 PW1100G, 12 V2500-A5, eight CFM56-5B, seven CFM56-7B, four LEAP-1A, four PW127, three GEnx-1B, one PW1500G, one PW1900G, one CF34-10, one LEAP-1B, and one Trent 700. The airframes are two A319s.
A $6 million security deposit will be funded at closing and ongoing targeted amounts will be based on the amount of leases expiring within four months, according to KBRA's report.
MUFG Bank is the liquidity facility provider. Joint structuring agents and joint lead bookrunners are MUFG and Wells Fargo Securities.