AABS Limited's Series A and B Asset- Backed Secured Term Loans Rated A+/A and BBB/BBB, Respectively, by S&P and Fitch

On January 10, 2013, AABS Limited ("AABS"), a bankruptcy remote limited liability company organized under the laws of Bermuda and tax resident in Ireland, closed an asset-backed secured term loan facility, comprised of $557.01 million of Series A loans and $93.335 million of Series B loans. The proceeds of the Series A and B loans were used by AABS to partially finance the purchase of a high-quality portfolio of 26 commercial passenger aircraft from affiliates of GE Capital Aviation Services Limited ("GECAS") consisting primarily of young tier 1 aircraft (in-production, in-demand aircraft types) with long expected remaining useful lives. Credit enhancement is comprised primarily of overcollateralization and a liquidity facility provided by Credit Agricole CIB. The Series A loans have an initial loan-to-value ("LTV") of 60% and the Series B loans have an initial LTV of 70%. The transaction also benefits from various performance triggers which could accelerate amortization. GECAS will act as servicer of the aircraft. The transaction is the first of its kind in 2013.

Cape Town to Enter Into Force in Canada on April 1, 2013

On December 21, 2012, the Canadian government completed the process to ratify and adopt the Convention on International Interests in Mobile Equipment (the "Convention") and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (the "Protocol" and together with the Convention, the "Cape Town Convention") by depositing an instrument of ratification with the International Institute for the Unification of Private Law (UNIDROIT). The Cape Town Convention establishes a uniform international legal framework among "contracting states" to facilitate cross-border, asset-based financing and leasing of aircraft equipment by providing secured creditors with significant protections to their security interests in aircraft equipment. In announcing the government's completion of the final steps towards ratification, the Honorable Denis Lebel, Minister of Transport, Infrastructure and Communities and Minister of the Economic Development Agency of Canada for the Regions of Quebec, noted that the "Convention and Protocol [would] help to strengthen the [Canadian] airline and aerospace industries through an international legal framework for the financing of their aircraft equipment." Air Canada, Canada's largest domestic and international airline, applauded the Canadian government's decision to finally adopt the Cape Town Convention. In anticipation of the completion of the final steps towards ratification of the Cape Town Convention, Michael Rousseau, Air Canada's Executive Vice President and Chief Financial Officer, stated that "with ratification, Canada would join the growing ranks of countries benefiting from this important international agreement that will provide Canada's airlines with access to more competitive aircraft financing and leasing terms on international finance markets, for the benefit of Canada's airlines and all stakeholders." Canada elected to adopt Article XI, Alternative A of the Protocol ("Alternative A") in its entirety to all types of insolvency proceedings and all insolvency-related events, and, like most "contracting states," declared that the waiting period for the purposes of Article XI(3) of Alternative A to be sixty (60) calendar days. The Cape Town Convention will enter into force in Canada on April 1, 2013. More than 50 countries and regions around the world have already adopted the Cape Town Convention, including the U.S., China and several European countries. A complete list of "contracting states" can be found at http://www.unidroit.org/english/implement/i-2001-aircraftprotocol.pdf .

DEAL Roundup

  • On December 21, 2012, DVB Bank SE and PK Air Finance closed a senior debt refinancing of a portfolio of 16 aircraft for Dubai Aerospace Enterprise.
  • On December 20, 2012, Continental priced a $425M six-year "Super C" EETC at 6.125%. The certificates, which combined a $200M portion of Continental's March EETC and a $225M portion of its October EETC, are secured by 42 aircraft.
  • On December 13, 2012, International Lease Finance Corporation priced $287M worth of prefunded secured notes due 2025 guaranteed by US Em-Im Bank at 1.492%. Proceeds from the sale of the notes will be used to finance the purchase of two new Boeing 777-300ER aircraft.
  • On December 12, 2012, Atlas Air issued $143M worth of 12-year U.S. Ex-Im guaranteed notes with a coupon rate of 1.48%. Proceeds from the bond issuance will be used to purchase one Boeing 747-8F.
  • On December 11, 2012, US Airways issued EETCs in an aggregate face amount of $546.184M, consisting of a $418.113M 4.625% Class A tranche with an expected maturity in 2025 and a $128.071M 6.75% Class B tranche with an expected maturity in 2021. Proceeds from the sale of the EETCs will be used to finance the purchase of eleven new Airbus aircraft.
  • On December 11, 2012, General Electric Capital Corporation issued a $1.7B 7-year bond secured by 137 aircraft. The deal was split among three portions: a fixed rate 3-year $1B portion at 1%; a fixed rate 7-year $400M portion at 2.1%; and a floating rate 3-year $300M portion.
  • On November 28, 2012, Aircastle Limited priced a $500M unsecured 7-year bond at 6.25%. Proceeds from the bond issuance will be used for general corporate purposes and the purchase of aviation assets.
  • On November 21, 2012, Air China issued a 12-year $140.7M US Ex-Im Bank guaranteed bond at 1.605%. Proceeds from the bond issuance will be used to finance one Boeing 777-300ER.
  • On November 20, 2012, LATAM priced a 12-year $212.355M floating rate US Ex-Im Bank guaranteed bond at LIBOR plus 33 basis points. Proceeds from the bond issuance will be used to refinance the deliveries of three Boeing 767-300ERs.

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