KBRA Releases Research – Loan vs. Lease Aviation ABS: Same Plane, Different Seats

NEW YORK--(BUSINESS WIRE)--KBRA releases research assessing the aviation loan ABS market, highlighting its growth, credit considerations, and evolving role within aviation structured finance.

Since the inaugural aviation loan issuances in 2021, the aviation loan asset-backed securities (ABS) sector has experienced continued growth, reaching $4.8 billion in total notional volume through 2025. Collateral in aviation loan ABS typically consists of loans directly to airlines (generally full-recourse loans) or loans to aviation lessors who, in turn, lease the underlying aircraft to airlines (typically limited-recourse loans). In limited-recourse facilities, aviation loan ABS generally benefit from additional credit enhancement relative to traditional aviation lease ABS, as obligors tend to retain equity in the secured asset, which incentivizes continued loan repayment regardless of the receipt of lease payments from the underlying airline lessee. Compared to aviation lease ABS, which may feature pools of 15 or more assets, aviation loan ABS portfolios are often composed of 15 or more cross-collateralized facilities with more than 100 assets, offering additional diversification.

Click here to view the report.

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About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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