Mizuho is the sole lead of the transaction. Kroll Bond Rating Agency (KBRA) assigned preliminary ratings of A to the $603m ‘A’ notes, and a BBB to the $106m class ‘B’ notes.
The collateral pool of the Labrador offering features a weighted average aircraft age of 4.9 years, with a weighted average remaining lease term of 7.3 years. The Kroll analysts stated in the presale that the young age of the collateral is a plus for the deal, and represents one of the “more liquid securitized aircraft fleets in the market”.
Issuers of aircraft ABS have been coming to market in 2016 with portfolios of newer aircraft, which are more liquid than those containing older planes which have higher fuel and maintenance costs that can eat into the cash flows of a transaction.
However, despite the added liquidity of younger aircraft, investors will still see value in older collateral, according to market participants.
“We’re at a historic point where there’s a mid-life pool of aircraft that are still in production. An airline today can go and buy aircraft that are 15-19 years old, and there would be 50-100 airplanes that are identical in engine and aircraft type which is the first time ever someone can do that and then still buy in-production models,” Robert Korn, president at Apollo Aviation Group, told GlobalCapital on Wednesday. Apollo has issued two aircraft ABS deals in 2016, in March and October, and has be an active issuer in past years.
“That’s part of the reason why there’s investor willingness to consider these pools of assets we’re offering [rather] than what you typically expect buying an aircraft ABS,” he added.
For its last deal in October, Apollo pooled a portfolio of aircraft with a weighted average age of 12.2 years.
“KBRA views the aircraft in this transaction as attractive leasing assets due to their young age, broad user base and strong marketability for releasing to other operators beyond the expiration of the initial leases,” the analysts wrote.
A debut deal from Blackbird Capital, which was priced earlier this month, also featured younger aircraft collateral in the portfolio.