AIP Capital, an alternative investment manager focused on opportunities in asset-based finance, and Monroe Capital, an asset management firm specializing in private credit markets and asset-based finance, closed an inaugural aircraft asset-backed securitization (ABS) financing, MC Aviation 2026-1 (MCAV 2026-1) as part of AIP and Monroe’s aircraft leasing joint venture.
“We are pleased by the strong investor interest in this transaction, which we believe speaks to confidence in AIP’s expertise and capabilities in the aircraft leasing sector and our strategic partnership with Monroe Capital,” Jared Ailstock, managing partner of AIP, said. “The transaction is foundational to the investment program we’ve developed with Monroe and look forward to becoming a long-term programmatic issuer in the aircraft ABS market.”
Aaron Peck, managing director and co-head of alternative credit solutions at Monroe Capital, added, “The successful closing of MCAV 2026-1 marks an important milestone for Monroe’s Alternative Credit Solutions platform and reflects the strength of our asset-backed finance capabilities. We are grateful for the support of our investors and financing partners and look forward to continuing to build upon the foundation established through this transaction.”
Aaron Levy, managing director, alternative credit solutions at Monroe Capital, said, “This transaction reflects the quality of the portfolio assembled through our partnership with AIP and our disciplined approach to aviation investing. We believe commercial aviation continues to offer compelling investment opportunities supported by strong asset fundamentals, favorable supply-demand dynamics and the continued growth of global air travel. The successful execution of this inaugural securitization highlights the strength of the platform.”
MCAV 2026-1 totals $643 million of asset-backed debt and will be used to finance a diversified portfolio of 18 commercial passenger aircraft on operating leases with 12 different lessees across 10 different jurisdictions. The aircraft in the portfolio have a weighted average age of 5.6 years and a remaining lease term of approximately 6.9 years. 71% of the portfolio is comprised of next-generation aircraft and 81% narrowbody aircraft, with only one widebody aircraft in the portfolio which is next-generation aircraft under one year old.
MCAV 2026-1 comprises three tranches: $547 million of Class A notes with a fixed coupon of 5.82% yielding 5.896%, $66.5 million of Class B notes with a fixed coupon of 6.60% yielding 6.696% and $29.6 million Class C notes which were retained by the issuer. The Class A notes to be issued have an initial loan-to-maintenance adjusted base value (LTV) of 74%, the Class B notes to be issued have an initial LTV of 83%, and the Class C notes to be issued have an initial LTV of 87%.
The Class A notes will be rated A, the Class B notes will be rated BBB and the Class C notes will be rated BB by DBRS Morningstar and Kroll Bond Rating Agency. Additionally, the Class A notes will be rated A2 by Moody’s Investors Service.
AIP Capital will act as servicer for the transaction. Deutsche Bank Securities, BNP Paribas and Fifth Third Securities will act as co-structuring agents and joint lead bookrunners, Citigroup as joint lead bookrunner, Natixis and BMO Capital markets as bookrunners and KeyBanc Capital Markets as co-manager.
Natixis acted as liquidity facility provider and UMB Bank as trustee, security trustee and operating bank. Pivotal Corporate AMS is the managing agent. Milbank and Walkers (Cayman) and Walkers (Ireland) provided legal counsel to MC Aviation. Gibson Dunn acted as counsel to the bookrunners.
