Castlelake, L.P., a global private investment firm and experienced leader in aircraft leasing and servicing, recently priced its seventh structured ABS financing, Castlelake Aircraft Structured Trust 2021-1 (CLAS 2021-1), which is the first such transaction to be completed since the beginning of the global COVID-19 pandemic.

"We were very pleased by the robust investor interest in this transaction, which we believe speaks to our strong servicing track record and deep expertise in the aircraft leasing sector," said Evan Carruthers, Managing Partner and Co-Founder of Castlelake. "Investors will benefit from the structural improvements we have made compared to prior vehicles, which are designed to enable this transaction to deliver sustainable, attractive returns in a range of market conditions. In addition, we believe that reopening the aircraft ABS market with this deal will have a positive impact on the broader aviation sector as well and are pleased to be able to continue to play a leading role in the space."

CLAS 2021-1 totals $595 million of asset-backed debt and will be used to finance a diversified portfolio of 26 commercial passenger aircraft and one freighter on operating leases with 11 different lessees in 10 different countries. The aircraft in the portfolio have a weighted average age of 9.3 years and a remaining lease term of approximately 7.8 years with no scheduled remarketing in the first two years of the transaction.

CLAS 2021-1 comprises two tranches: $476.0 million Class A notes with a fixed coupon of 3.474% yielding 3.5% and $119.0 million of Class B notes with a fixed coupon of 6.656% yielding 6.75%. The weighted average yield across the structure is 4.15%. The Class A notes to be issued have an initial loan-to-adjusted base value (LTV) of 60% and the Class B notes to be issued have an initial LTV of 74.9%.

Moody's Investors Service, in its first aircraft ABS rating in over a decade, has indicated the Class A notes will be rated A2 and the Class B notes will be rated Baa2. Additionally, Kroll Bond Rating Agency has indicated the Class A and Class B notes will be rated A and BBB, respectively.

CLAS 2021-1 also features several structural enhancements Castlelake designed to address some of the challenges of the current environment. These enhancements include an equipment note style structure that allocates advance rate and amortization on an asset-by-asset basis, expanded covenants, lower starting leverage, faster amortization and increased cash sweeps. These features build on Castlelake's history of financial innovation, which has been a hallmark of the firm's CLAS program since its inception in 2014.

With the completion of CLAS 2021-1, Castlelake will have sponsored approximately $5.3 billion in aircraft ABS since beginning the program in 2014. Notably, Castlelake's prior CLAS vehicles have performed through the COVID-19 pandemic, with Class A and B notes of all four outstanding transactions outperforming and ahead of their repayment schedules by an average of 6.5% as of December 2020. The Castlelake Aviation team is composed of 63 experienced professionals with capabilities across the full range of aircraft leasing and servicing related activities.

Castlelake will act as servicer for the transaction. Goldman Sachs & Co. LLC is the lead structuring agent and left lead bookrunner. Sun Life Assurance Company of Canada is the liquidity facility provider and UMB Bank, N.A. is the trustee, security trustee and operating bank. Phoenix American Inc. is the managing agent. Clifford Chance US LLP provided legal counsel to Castlelake and KPMG provided tax guidance. The notes were offered only to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S. The notes were not registered under the United States Securities Act of 1933, as amended (the "Securities Act"), and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.