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By: Patrick Dolan and Ramy Ibrahim, Norton Rose Fulbright Us LLP
THE AIRCRAFT LEASE SECURITIZATION MARKET IS EVOLVING as evidenced by an increase in these transactions over the last few years. Indications are that 2017 may surpass 2016 in total number of aircraft lease securitizations. Three potentially significant issues for the aircraft lease securitization market during 2017 and in 2018 are (1) the applicability of the U.S. risk retention rule (Risk Retention Rule; see 79 FR 77602) to aircraft lease securitizations, (2) the U.S. Commodity Futures Trading Commission’s rules regarding margin requirements for uncleared swaps, and (3) compliance with the Volcker Rule.
This article explains the structure of aircraft lease securitizations and certain bankruptcy and rating agency issues that must be considered in structuring these transactions, the benefits of using the debt capital markets for aviation financing, and the issues for the aircraft lease securitization market during 2017 and in 2018.
Aircraft lease securitizations generally come in two types: aircraft lease portfolio securitizations and enhanced equipment trust certificate (EETC) securitizations.
To read the full practice note in Lexis Practice Advisor, follow this link.
Patrick D. Dolan is a partner with Norton Rose Fulbright. He focuses his practice on asset-backed and mortgage-backed securitizations, including those involving innovative structures. Patrick has more than 30 years of experience representing warehouse lenders, issuers, underwriters, investors, and multi-seller commercial paper conduits. Patrick has worked on financings and securitizations of various asset types. Patrick chairs the New York City Bar Association's Structured Finance Committee. Ramy Ibrahim is an associate in Norton Rose Fulbright's New York office. He focuses his practice on finance and M&A, helping clients in the financial institutions, technology, energy, transportation, and innovation industries. His background includes corporate finance, private and public mergers and acquisitions work, and equipment finance.
For more information about offerings of investment grade asset-backed securities, see
> LEARNING THE BASIC LEGAL FRAMEWORK OF A SECURITIZATION TRANSACTION
RESEARCH PATH: Finance > Structured Finance and Securitization > Securitization > Practice Notes
> INTRODUCTION TO SECURITIZATION
For a discussion on the roles that transaction parties play in packaging and servicing the underlying financial assets supporting asset-backed securities, see
> UNDERSTANDING THE MAJOR PARTIES AND DOCUMENTS IN A SECURITIZATION TRANSACTION
For guidance on the requirements that an issuer of a securitization transaction must meet in order to achieve bankruptcy remoteness, see
> ACHIEVING BANKRUPTCY REMOTENESS IN SECURITIZATIONS
For more information on margin requirements for uncleared swaps, see
> MARGIN REQUIREMENTS FOR SWAPS AND SECURITY-BASED SWAPS
RESEARCH PATH: Finance > Financial Derivatives > Understanding Financial Derivatives > Practice Notes
1. See CFTC Letter No. 17-11, February 13, 2017.