Global Jet Capital has closed its fourth asset-backed security (ABS) offering, BJETS 2020-1, raising around $521.8m. The closing brought total Global Jet Capital’s securitised assets to more than $2.8bn and bonds issued to over $2.3bn. BJETS 2020-1 the first capital markets structured finance transaction secured by aircraft assets since the Covid-19 pandemic.
The BJETS 2020-1 offering contained three tranches of notes: a $426.4m Class A tranche, a $63.6m Class B tranche and a $31.8m Class C tranche. Global Jet Capital reported that each tranche was oversubscribed and attracted orders from over 30 investors. The offering contained a total of 55 aircraft over 34 separate models, one third of which are Gulfstream G550’s.
Shawn Vick, CEO of Global Jet Capital, told Corporate Jet Investor: “We believe the tremendous interest in the BJETS 2020-1 offering is a strong indication that investors see the value of the business aviation sector, especially in contrast to the setbacks experienced within the commercial aviation sector. This interest is also reflected in the strong price performance of our previously issued securitisations in the secondary market.”
In the post-Great Recession world, Global Jet Capital said the business aviation market has demonstrated balanced supply and demand dynamics and steady growth. Since 2009 the company has an 81% asset recovery rate, whilst credit losses in 2018 and 2019 were less than 0.1%
81% asset recovery rate
Vick continued: “Since the beginning of the pandemic, all the macro indicators – including flight operations, transaction activity, and inventory levels – have shown that the business aviation market has remained stable.
“While production rates were impacted, this was a function of industrial closings designed to protect employees. While difficult, these temporary disruptions have acted as a guardrail against inventory buildup and industry-wide aircraft devaluation. We are optimistic about the future for the business aviation market.”
There are more than 22,000 business aircraft in service around the globe and business aviation in the US alone employs over 1.2m people and contributes over $150bn to the country’s economic output. But many investors are just beginning to truly understand business aviation’s value, said Vick.
“Operators, owners, and users within the business aviation sector represent a cross section of global GDP [Gross Domestic Product], literally hundreds of industry types as opposed to just one. This is the underlying strength of our industry that investors are now discovering. The Covid-19 pandemic has put a spotlight on these differences, helping investors see the incredible industry diversity represented in the owners and users of operating fleet and the variety of aircraft types therein,” said Vick.
The ABS market remains key
Global Jet Capital’s first ABS offering closed in February 2018 came to $608m. It’s second in June 2018 offered $674m, bringing the securitised total to $1.5bn. The firm completed its third offering in June 2019 raising approximately $517m. The ABS market remains key to Global Jet Capital’s funding strategy.
In conjunction with closing the BJETS 2020-1 securitisation, Global Jet Capital also extended the term of its warehouse credit facility provided by a group of international banking institutions. Those included: Deutsche Bank as structuring agent and lender and Bank of America, Citibank, Morgan Stanley, California Bank & Trust, FirstBank Florida and State Bank of India as lenders.
Meanwhile, in early October, Global Jet Capital entered into its first privately-placed financing transaction, raising $77m in new funding for the business.