Blackbird Closes $800MM Aircraft ABS to Refinance Warehouse Debt

Blackbird Capital I (Blackbird), announced that Blackbird Capital Aircraft Lease Securitization Limited 2016-1 (BBIRD Cayman) and Blackbird Capital Aircraft Lease Securitization U.S. 2016-1 (BBIRD USA and, collectively, the issuers) closed an $800 million, fixed rate notes offering, comprised of $200 million 2.487% series AA fixed rate notes $540 million of 4.213% series A fixed rate notes and $60 million of 5.682% series B fixed rate notes (series B notes and together with the series AA notes and series A notes, the notes).

The issuers also offered subordinated notes comprised of fixed rate series R-1, R-2, R-3 and D notes and a series E note representing the equity interest in BBIRD Cayman, each of which were purchased by an affiliate of Blackbird. The subordinated notes offer regulated investors, with sensitivity to risk-based capital, a more efficient means of accessing equity-like investments in this asset class.

The series AA notes, series A notes and series B notes were rated AA, A and BBB, respectively, by S&P and by Kroll. The notes are backed by a portfolio of 19 aircraft which will be acquired by the issuers. The aircraft comprise a mix of narrowbody and widebody jet aircraft that, as of September 30, 2016, had an average age of 3.28 years and were leased or expected to be leased to 16 lessees based in 13 countries. Air Lease and its Irish affiliate, ALC Aircraft Limited, will act as servicers with respect to the aircraft.

Proceeds from the issuance of the notes will be used by the issuers to refinance the existing warehouse loans and/or acquire the aircraft. Napier Park, through third party funds it manages, and Air Lease, are retaining their equity stakes in the joint venture.

“The Air Lease team continues to innovate and has created a model for the next generation of ABS issuance for the aircraft leasing sector with a simplified structure that has strong credit protections and appeals to a broad group of investors. This transaction has set a new benchmark for post financial crisis aircraft ABS issuances, including the first AA tranche of rated securities, the lowest blended cost of funds through the BBB class, the largest number of investors to place bids, the largest number of investors to get allocated bonds, and the shortest period to execute a transaction in only six weeks,” said Ryan McKenna, head of Strategic Planning of Air Lease.

“We are very pleased with this ground-breaking issuance, the success of the investment to-date, and more broadly, our partnership with Air Lease Corporation,” said Manu S. Rana, partner at Napier Park. “Thanks to our partnership, and as evidenced by the pricing of this issuance, Blackbird has assembled an attractive portfolio of leased commercial aircraft, further demonstrating Napier Park’s ability to work with leading operating partners to originate and manage differentiated investment opportunities with attractive risk-adjusted returns for our investors.”

BofA Merrill Lynch, BNP Paribas and Mizuho Securities acted as joint lead structuring agents and joint lead bookrunners of the transaction.

Citigroup also acted as a joint lead bookrunner. Credit Suisse, Fifth Third Securities, MUFG and Societe Generale acted as co-managers. Hughes Hubbard & Reed advised Blackbird and the issuers, and Milbank, Tweed, Hadley & McCloy acted as counsel to the joint lead structuring agents.

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