AIP Capital and Monroe Capital LLC recently closed an inaugural aircraft asset-backed securitization (ABS) financing, MC Aviation 2026-1 (MCAV 2026-1) as part of AIP and Monroe's aircraft leasing joint venture.
"We are pleased by the strong investor interest in this transaction, which we believe speaks to confidence in AIP's expertise and capabilities in the aircraft leasing sector and our strategic partnership with Monroe Capital," said Jared Ailstock, Managing Partner of AIP. "The transaction is foundational to the investment program we've developed with Monroe and look forward to becoming a long-term programmatic issuer in the aircraft ABS market."
"The successful closing of MCAV 2026-1 marks an important milestone for Monroe's Alternative Credit Solutions platform and reflects the strength of our asset-backed finance capabilities. We are grateful for the support of our investors and financing partners and look forward to continuing to build upon the foundation established through this transaction," said Aaron Peck, Managing Director & Co-Head of Alternative Credit Solutions at Monroe.
"This transaction reflects the quality of the portfolio assembled through our partnership with AIP and our disciplined approach to aviation investing," said Aaron Levy, Managing Director, Alternative Credit Solutions at Monroe. "We believe commercial aviation continues to offer compelling investment opportunities supported by strong asset fundamentals, favorable supply-demand dynamics, and the continued growth of global air travel. The successful execution of this inaugural securitization highlights the strength of the platform."
MCAV 2026-1 totals $643 million of asset-backed debt and will be used to finance a diversified portfolio of 18 commercial passenger aircraft on operating leases with 12 different lessees across 10 different jurisdictions. The aircraft in the portfolio have a weighted average age of 5.6 years and a remaining lease term of approximately 6.9 years. 71% of the portfolio is comprised of next-generation aircraft and 81% narrowbody aircraft, with only one widebody aircraft in the portfolio which is next-generation aircraft under one year old.
MCAV 2026-1 comprises three tranches: $547.0 million of Class A notes with a fixed coupon of 5.82% yielding 5.896%, $66.5 million of Class B notes with a fixed coupon of 6.60% yielding 6.696% and $29.6 million Class C notes which were retained by the issuer. The Class A notes to be issued have an initial loan-to-maintenance adjusted base value (LTV) of 74%, the Class B notes to be issued have an initial LTV of 83%, and the Class C notes to be issued have an initial LTV of 87%.
The Class A notes will be rated A, the Class B notes will be rated BBB and the Class C notes will be rated BB by DBRS Morningstar and Kroll Bond Rating Agency. Additionally, the Class A notes will be rated A2 by Moody's Investors Service.
AIP Capital will act as servicer for the transaction. Deutsche Bank Securities, BNP Paribas and Fifth Third Securities will act as Co-Structuring Agents and Joint Lead Bookrunners, Citigroup as Joint Lead Bookrunner, Natixis and BMO Capital markets as bookrunners and KeyBanc Capital Markets as Co-Manager. Natixis acted as liquidity facility provider and UMB Bank, N.A. as trustee, security trustee and operating bank. Pivotal Corporate AMS Limited is the managing agent. Milbank LLP and Walkers (Cayman) LLP and Walkers (Ireland) LLP provided legal counsel to MC Aviation. Gibson Dunn acted as counsel to the bookrunners.
The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any jurisdiction and may be offered or sold only in a transaction exempt from, or not subject to, the registration requirements of the Securities Act. The Notes were offered and sold only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and outside the United States to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act.