GECAS is out with the third asset-backed securitization in its STARR series. STARR 2019-2 (STARR III) is offered as a $446.3 million three tranche debt portion as well as an e note tranche.
The debt portion comprises: $355.047 million A-rated A notes, with an initial loan-to-value (LTV) of 65.9%; $56.570 million BBB-rated B notes with a 76.4% initial LTV; and $34.72million C noted, rated BB, with an 82.8% initial LTV.
The proceeds will be used to purchase a portfolio of 20 narrowbody aircraft – 10 A320-200s, seven 737-800s, two 737-700s and one 737-900ER – with an initial weighted average aircraft age of 8.4 years and a weighted average remaining lease term of approximately 5.5 years.
GECAS is the servicer, and will take a small slice of equity subject to a two-year lock-up. Lead structuring agent and lead bookrunner is Goldman Sachs. Credit Agricole-CIB is the liquidity facility provider and standby LC issuer with Nordea. Citi is the security trustee, operating bank and trustee. Canyon Financial Services is the managing agent.
GECAS closed STARR 2019-1 (STARR II) in April this year. STARR II 2019-1 issued $474 million of debt in three tranches of notes with a $99.556 million equity tranche.
The debt portion comprised of: $382 million A notes, rated A, with an initial LTV of 64.9%, paying a 4.089% coupon and 4.125% yield; $69 million B notes, rated BBB, with an LTV of 76.6% paying 5.095% coupon and 5.15% yield; and $23 million C notes, rated BB with an LTV of 80.5%, with a 6.413% coupon and 6.5% yield. The $99.556 million equity tranche yield 17.5%.
Some 19.5% of the $99.556 million equity tranche was held by the asset manager Och-Ziff, which was also present on STARR I, and was placed with funds advised by the asset manager at 21% IRR with a two-year lock-up. Some 9.5% of the equity was retained by GECAS with the same two-year lock-up, while $70.685 million was broadly distributed. Reports state that there was strong demand from existing STARR investors as well as new investors to the STARR programme, reflected by significant oversubscription in all three debt tranches and equity.
The STARR II notes are secured on a portfolio of 20 aircraft – seven 737-800s, four A320-200s, three A321-200s, three A319-100s, two 737-900ERs and one 737-700 – which are on lease to 13 lessees located in 11 countries, with an initial weighted average aircraft age of 5.9 years and a weighted average remaining lease term of approximately 6.6 years.
GECAS will act as servicer for the transaction, and an affiliate of GECAS will be acquiring a small minority percentage of the equity in STARR II. No doubt responding to criticism concerning high fees in the STARR I transaction, in STARR II the asset manager fee has been reduced and the location of the waterfall has been changed.
Deutsche Bank was the lead structuring agent and lead bookrunner. Credit Agricole-CIB provided the nine-month liquidity facility. Since the aircraft are yet to be acquired, standby letters of credit are supplied by CA-CIB and Natixis. Citi is the security trustee, operating bank and trustee. Canyon Financial Services is acting as managing agent.