volofin Capital Management Ltd. Closes Inaugural $538MM Aviation Loan ABS

volofin Capital Management Ltd. (“volofin”), an aviation alternative lending platform and asset management firm, has closed its previously announced inaugural aircraft loan asset-backed securitization, VFIN 2024-1, with volofin Finance (Ireland) DAC and volofin Finance US LLC as Co-Issuers. VFIN 2024-1 issued approximately $534 million of notes (including approximately $27 million of residual interest notes retained by volofin) that was used to acquire lender interests in a portfolio of 22 aviation loan facilities (majority originated by volofin). 

Morningstar DBRS and KBRA provided ratings for the transaction, with Morningstar DBRS awarding AAA and AA ratings for the Class A and Class B tranches, respectively. This was only the second aviation Loan ABS transaction to secure a AAA rating, which volofin attributes to the quality of the loan portfolio, strength and mix of the underlying credit counterparties and collateral assets, as well as the management team’s significant experience and track record across multiple industry and broader market cycles. 

The issuance was significantly oversubscribed (almost 6x) and benefited from broad participation from capital markets participants (including certain investors new to aviation). The notes are secured by the proceeds of a portfolio of 107 senior-secured aviation loans secured by 225 assets.  The underlying collateral assets (32% narrowbody, 22% widebody, 9% turboprop, 18% regional jet aircraft, and 19% aircraft engines and auxiliary power units) are spread out across 51 credit counterparties and across 27 jurisdictions. The underlying collateral assets were initially valued at approximately $930 million (average half-life base value from BK Associates, Inc., IBA Group Ltd and mba Aviation.

“We are extremely excited and proud to complete this transaction. It represents a significant accomplishment for volofin as a first-time issuer,” Bob Peart, CEO of volofin, said. “The ability to secure a AAA rating and the strong endorsement from a prominent group of institutional investors is a testament to the strength of the volofin platform, our strong track record and position in the market.  The demonstrated access to the capital markets expands our funding base, and further enhances our ability to provide traditional and bespoke financing solutions for our customers.” 

BNP Paribas served as Sole Lead Bookrunner and Co-Structuring Agent alongside volofin who also served as Co-Structuring Agent. Deutsche Bank Securities and SMBC Nikko served as Co-Managers.  Arnold & Porter Kaye Scholer LLP served as Counsel to volofin and the Issuers while Milbank LLP served as Counsel to the Initial Purchasers.