AIP Capital and Monroe Capital Successfully Complete $643 Million Aircraft Securitization

AIP Capital and Monroe Capital Complete Major Securitization

AIP Capital, a prominent alternative investment manager, alongside Monroe Capital, a leading asset management firm, recently announced the completion of a significant aircraft asset-backed securitization (ABS) worth $643 million. This marks the inception of their joint venture in aircraft leasing, specifically the MC Aviation 2026-1 deal (MCAV 2026-1).

The announcement came on July 17, 2026, and the anticipated interest from investors during this transaction has shown a promising outlook on AIP's competence in the aircraft leasing industry. Jared Ailstock, Managing Partner of AIP, expressed satisfaction over the overwhelming investor interest, providing confidence in their operational capabilities and the strategic alliance with Monroe Capital. He emphasized that this transaction sets the groundwork for the planned investment programs under the partnership, with a long-term vision as a programmatic issuer in the aircraft ABS market.

Aaron Peck, Managing Director and Co-Head of Alternative Credit Solutions at Monroe, also acknowledged the closing of MCAV 2026-1 as a vital milestone for their platform, which specializes in alternative credit solutions. He emphasized the support received from investors and financing partners, showcasing the firm’s strong position in asset-backed finance. Furthermore, he noted that the transaction reflects the robust portfolio created through collaboration with AIP, showcasing a disciplined approach towards aviation investments emphasizing the strong fundamentals of commercial aviation.

The $643 million MCAV 2026-1 securitization is composed of a diversified portfolio that includes 18 commercial passenger aircraft leased to 12 distinct lessees across 10 jurisdictions. The average age of the aircraft in this portfolio is 5.6 years, with an approximate remaining lease term of 6.9 years. Notably, 71% of the aircraft comprises next-generation models while 81% are narrowbody aircraft with a solitary widebody aircraft included, which is a next-generation model under one year old.

The MCAV 2026-1 securitization comprises three key tranches, delineated as follows: $547 million in Class A notes offering a fixed coupon rate of 5.82% with a yield of 5.896%, $66.5 million in Class B notes at a 6.60% fixed coupon yielding 6.696%, and $29.6 million of Class C notes retained by the issuer. Rating agencies DBRS Morningstar and Kroll Bond Rating Agency have provided ratings for these notes, designating Class A notes with an A rating, Class B with a BBB rating, and Class C with a BB rating. Additionally, Moody's Investors Service has rated the Class A notes as A2.

Under this agreement, AIP Capital will take the role of servicer, with Deutsche Bank Securities, BNP Paribas, and Fifth Third Securities serving as Co-Structuring Agents and Joint Lead Bookrunners, alongside Citigroup. The transaction also sees Natixis as the liquidity facility provider, while UMB Bank, N.A. plays the roles of trustee, security trustee, and operating bank. Pivotal Corporate AMS Limited has been designated as the managing agent, and notable legal firms including Milbank LLP and Walkers (Cayman) LLP have provided counsel.

It's important to note that the securities under this transaction will not be registered under the U.S. Securities Act of 1933 or any other jurisdiction. They will be offered exclusively to qualified institutional buyers, abiding by the provisions of Rule 144A of the Securities Act and outside the U.S. to non-U.S. persons under Regulation S.

In the wake of achieving substantial closings like MCAV 2026-1, AIP Capital and Monroe Capital are optimistic about the robust investment avenues the aviation sector holds, driven by solid asset fundamentals and the favorable dynamics of supply and demand, particularly as global air travel continues its upward trajectory. The success of this inaugural securitization serves as a testament to both firms’ strong foundations and capabilities in the asset-backed finance domain.