November 29, 2018

Vx Capital prices all-cargo aircraft ABS

Vx Capital Partners has priced the first all-freighter securitisation, raising $189 million to purchase 35 aircraft, including 33 B-737-400SFs and two B-737-300SFs.

Kroll Bond Rating Agency (KBRA) maintains that the transaction marks the first aircraft asset-backed securities (ABS) transaction consisting 100% of narrowbody freighters.

The three-tranche loan deal priced on 20 November, with the $138.5 million A loans carrying a 5.438% coupon, the $35.5 million B loans 6.535%, and the $15 million C loans 8.474%.

KBRA has rated the debt tranches as single-A, triple-B and double-B respectively.

BNP Paribas is lead manager, while DVB Bank and NordLB are co-managers on the deal.

Aircraft in the portfolio are on lease to 12 lessees located in 10 countries, with three aircraft not subject to lease, including two aircraft subject to letters of intent (LOIs) for lease and one being marketed for lease.

As of 26 October, the portfolio had a weighted average remaining lease term of about 4.3 years, which is longer than, or comparable to, recent mid- to end-of-life aircraft ABS transactions, with approximately 9.5% of the portfolio initially not subject to a lease.

As of third quarter 2018, the portfolio has an initial value of approximately $249.9 million.

The portfolio has an aggregate current market value of about $283.6 million, which is 13.5% greater than the maintenance adjusted base value.

Founded in 2002, San Francisco-based Vx Capital was a passenger aircraft lessor until 2014 when the company changed strategy to leasing narrowbody freighters.

In 2016, Vx Capital launched a fund to build up a portfolio of such aircraft.