Castlelake, L.P., a global private investment firm and experienced leader in aircraft ownership and servicing, recently priced its sixth structured ABS financing, Castlelake Aircraft Structured Trust 2019-1 (CLAS 2019-1). CLAS 2019-1 totals $867.6 million of asset-backed debt and will be used to finance a diversified portfolio of 28 younger mid-life aircraft and four secured aircraft loans with 14 airline lessors in 13 countries. The aircraft in the portfolio have a weighted average age of approximately 8.9 years and the weighted average remaining lease term of the aggregate portfolio is approximately 4.5 years.
“Castlelake thoughtfully designed Castlelake Aircraft Structured Trust 2019-1 as a conservative aircraft ABS financing structure that we believe can sustain performance over the long term, as some volatility begins to surface within the aviation macro environment,” said Evan Carruthers, managing partner and co-founder of Castlelake. “The result of this pricing exemplifies Castlelake’s investor-focused approach by creating a product that provides exposure to quality, in-demand assets, reasonable financing levels and our differentiated servicing and risk management expertise.”
CLAS 2019-1 is comprised of three tranches: $679.4 million Class A notes with a fixed coupon of 3.967% yielding 4.0%; $115.0 million Class B notes with a fixed coupon of 5.095% yielding 5.15%; and $73.2 million Class C notes with a fixed coupon of 6.899% yielding 7.0%. The weighted average yield across the structure is 4.405%. The Class A notes to be issued have an initial loan-to-adjusted base value (LTV) of 65%, and Fitch Ratings, Inc. (Fitch) and Kroll Bond Rating Agency (KBRA) have indicated the Class A notes will be rated Asf/A. Class B notes to be issued have an initial LTV of 76% and Fitch and KBRA have indicated the Class B notes will be rated BBBsf/BBB. The Class C notes have an initial LTV of 83% and Fitch and KBRA have indicated the Class C notes will be rated BBsf/BB.
With the completion of CLAS 2019-1, funds and investment platforms managed by Castlelake will have issued approximately $5 billion in aircraft ABS since beginning the program in 2014. Since inception in 2005 through March 31, 2019, Castlelake funds and investment vehicles have invested in more than 550 aircraft across multiple aircraft types. Castlelake offers full aircraft and engine leasing services and specializes in creative, flexible solutions for aging aircraft and engines. The Castlelake Aviation team is comprised of professionals with extensive experience in sourcing, underwriting and technical management.
Castlelake will act as servicer for the transaction. Goldman Sachs is the sole structuring agent and lead bookrunner. Natixis is the liquidity facility provider and UMB is the trustee, security trustee and operating bank. Canyon Financial Services is the managing agent. Vedder Price P.C. provided legal counsel to Castlelake and PwC 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.