Vx Capital Partners (Vx) closed its inaugural asset-backed deal, becoming the first issuer since 1999 to securitize an all-freighter portfolio. The loan-format issuance generated $189 million across three classes of term loans, secured by thirty-five 737 Classic freighters. Most of the aircraft were originally acquired in passenger configuration by Vx and subsequently converted and leased.

Vx Cargo 2018-1 Trust will be serviced by Vx through an affiliate, and the equity in the transaction will be retained by Vx Freighter Investment Fund (“VXF”). The $107 million of equity behind VXF was raised in 2016.

Gary Lew, Executive Vice President of Capital Markets and Finance remarked, “Each functional department at Vx contributed to bring the portfolio to a point where it was sufficiently large and diverse to achieve the ratings and investor interest that we had hoped for.”

Serving the transaction was BNP Paribas as lead structuring agent and Nord LB and DVB as co-managers. UMB is acting as the Trustee, Canyon CTS as the Managing Agent and DVB as the Liquidity Facility provider. Milbank Tweed served as counsel to the issuer and Hughes Hubbard represented the underwriter.

The three classes of loans were rated A, BBB and BB by Kroll Bond Rating Agency (KBRA) and proceeds will be used to acquire 35 aircraft with a maintenance adjusted base value of $249 million. Bob Brown, one of the founding partners of Vx, commented that, “The growth of e-commerce along with the need to replace older model aircraft combine to generate steady demand for our narrowbody freighters. Having substantially completed the acquisition, conversion, leasing and financing phases, we now turn our focus in VXF to re-leasing and asset management.”

At close, the portfolio had a weighted average aircraft age of 23.1 years and weighted average remaining lease term of approximately 4.3 years. The aircraft are leased to 12 lessees in 12 countries, with three aircraft in the process of conversion. All but one aircraft are subject to lease.