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December 21, 2018  

Aircraft Lessor Developing Issuance Program

Airborne Capital plans to tap the asset-backed bond market to fund a joint venture that leases jets to airlines.

The Dublin firm teamed up in September with L1 Treasury, a Luxembourg asset manager, to form AltitudeOne Aviation. The partners capitalized the joint venture with $250 million of equity, and are negotiating with banks to secure several warehouse lines.

Now comes word that Airborne, which serves as the investment manager for AltitudeOne, plans to securitize cashflows from the leasing business. An initial bond offering is expected in the second half of 2019.

To build a capital-markets operation, Airborne hired Hari Raghavan from Credit Suisse, where since 2007 he structured securitizations of aircraft, container and railcar leases. Raghavan started Dec. 10 after completing a gardening leave. He reports to chief executive Ramki Sundaram, aircraft-finance professional who arrived in November 2017 from Natixis. Sundram previously ran the aircraft-finance unit at Investec.

Year-to-date, the volume of aircraft-lease securitizations stands at $7.4 billion, up from $6.5 billion in 2017 — making it the busiest year for the asset class since 2007, according to Asset-Backed Alert’s ABS Database. A combination of attractive funding costs and market liquidity have opened the door for more issuers, with firms including Kestrel Aircraft, Horizon Aircraft Finance and Zephyrus Aviation Capital entering the market this year.

Airborne launched in 2017 with backing from Natixis and Fexco Group, a privately owned financial-services business in Ireland.