Avolon Holdings announced that Sapphire Aviation Finance II and Sapphire Aviation Finance II Limited, newly established special purpose companies, closed a total of $620 million of fixed rate notes.

The issue will comprise:

• $490 million of 3.228% Series 2020-1 A Fixed Rate Notes due 2040 issued at a 3.250% yield;
• $86 million of 4.335% Series 2020-1 B Fixed Rate Notes due 2040 issued at a 4.375% yield; and,
• $44 million of 6.779% Series 2020-1 C Fixed Rate Notes due 2040 issued at a 6.875% yield

The notes are rated:

Additionally, Sapphire II Limited offered equity certificates representing the equity interest in SAPA 2020-1, with LibreMax Capital selected as the anchor investor and Avolon acquiring a minority share.

The notes are backed by a portfolio of 21 aircraft, with an appraised value of $746.8 million, which will be acquired by SAPA 2020-1 from Avolon using the proceeds of the issuance. The portfolio comprises a mix of 21 narrowbody and widebody aircraft that have a weighted average age of 7.5 years and are on lease to 19 lessees/airlines based in 18 countries. Avolon will act as servicer with respect to the portfolio and any additional aircraft acquired by the issuers.

Dómhnal Slattery, CEO Avolon commented: “This transaction follows the successful launch of our Sapphire vehicle in 2018 and we are particularly pleased with the yield for this issue, which is the lowest debt yield of any aircraft ABS issuance over the last decade. Investor demand for this issue reflects our standing in the capital markets and further builds on Avolon’s reputation as a leading ABS servicer.”

Mizuho Securities USA and Deutsche Bank Securities acted as joint lead structuring agents & joint lead bookrunners. Credit Agricole Securities (USA) and MUFG Securities Americas acted as joint lead bookrunners, with BNP Paribas Securities and Morgan Stanley & Co. also acting as joint bookrunners for the transaction. Natixis Securities Americas acted as a co-manager.

Clifford Chance US advised Avolon, the Issuers and the Certificate Issuer, and Milbank acted as counsel to the initial