30 May 2019 | Stratos, the global aircraft investment specialist, has closed the inaugural ABS featuring securitised debt, with equity sourced from the Japanese Operating Lease (“JOL”) market. The transaction was arranged on behalf of JP Lease (Japan), the leading JOL arranger. JP Lease sponsored the deal and underwrote the equity to sell to its diversified pool of Japanese corporate clients. The fifteen securitized aircraft were acquired with leases attached (to Air Canada, Scoot, Qatar, FlyDubai, Gulfair, Air Asia, Malindo, Philippine Airlines, TACA, Brussels Airlines and Batik) from two separate sellers (GECAS and Standard Chartered). Stratos arranged the acquisition and novation of the aircraft, the debt bridge funding, warehouse loan, ABS issuance and will service the portfolio through to lease maturity. Stratos’ portfolio under management has doubled following the acquisition of the portfolio and further develops its position as one of the fastest growing independent aircraft servicers.
The securitisation, led by Goldman Sachs and Deutsche Bank, featured A and B notes totalling $530m distributed to over twenty investors – mainly US insurers and fund managers. $20m of C notes were retained by Stratos and JP Lease. Both S&P and Kroll rated the A and B notes A and BBB respectively.
Gary Fitzgerald, CEO of Stratos, said “This is the most complex and innovative deal Stratos has arranged, all of us at Stratos are proud to have delivered this innovative financing solution to JP Lease so they can continue to expand product lines to their extensive investor base in Japan. We are grateful for the cooperation and support we have received from our airline clients, sellers and legal counsels to facilitate the simultaneous novation and transition of all fifteen aircraft on ABS closing.”
Goldman Sachs acted as lead structuring agent and lead left bookrunner. Deutsche Bank acted as Joint structuring agent and joint lead bookrunner. Natixis acted as joint lead bookrunner and is providing the liquidity facility. SMBC Nikko and Mizuho Securities acted as joint bookrunners and arrangers. The lead structuring agent on the bridge and warehouse was Deutsche Bank and Goldman Sachs was joint structuring agent. Phoenix American Financial Services (Ireland) is acting as managing agent. Wilmington Trust (USA) is the facility agent, security trustee, operating bank and trustee. KPMG (Dublin, Tokyo) advised on ABS due diligence accounting and tax advice. Milbank (London, New York) advised on the structuring, ABS issuance and acted on behalf of the warehouse borrower. K&L Gates (Tokyo, Singapore) advised on the acquisition and novation process. Clifford Chance (London, New York) advised the lenders on the warehouse facility and acted as ABS counsel. Walkers (Dublin, Cayman) advised on the creation, management of the various SPCs and local counsel support. Nishimura & Asahi advised on Japan related legal structuring. Multiple local counsels supported the novation and ABS transition including Hogan Lovells (Singapore, London), Stephenson Harwood (France, Malaysia), HFW (Belgium), Blakes (Canada), Tay and Partners (Malaysia), Sycip (Philippines), Dentons (Qatar), Arias (South America), Morris & James and DFPHJ (US). Wilmington Trust (London) was trustee for the debt warehouse. MBA, Avitas and IBA provided valuations and Alton provided maintenance projections.