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CEE & Turkey

CASE STUDY: Anatolia Pass Through Trust EETC

Turkish Airlines’ innovative Enhanced Equipment Trust Certificate (EETC) issuance was the first Japanese yen denominated deal of its kind and helped the company significantly expand its access to Asian liquidity.

Dec 5, 2016 // 10:29AM

Deal At A Glance

Deal Type: Enhanced Equipment Trust Certificate (EETC)

Deal Format: Private Placement

Location: Turkey / Japan

Issuer: Anatolia Pass Through Trust

Obligor: Turk Hava Yollari Anonim Ortakligi (Turkish Airlines)

Bookrunner / Structuring Agent: Mizuho Securities

Sales Agent: DBJ Securities

Legal Advisors: Nishimura & Asahi, Clifford Chance, Dikici Law Office, Pillsbury Winthrop Shaw Pittman LLP

Size: JPY 11,939,000,000 (US$111.7mn)

Tenor: Tranche ‘A’ – 12 years; Tranche ‘B’ – 9 years; Tranche ‘C’ – 7 years

Coupon: Tranche ‘A’ – 1.228%; Tranche ‘B’ 1.489%; Tranche ‘C’ – 2.214%

Issue Date: September 2015

Use of Proceeds: Finance the leasing of three Airbus A321-200 aircraft


In August 2015 Turkish Airlines was looking at ways of securing new long-term funding while expanding its access to capital from new pockets of investors, particularly in Asia, as it sought to lease several new aircraft.

On 10 September 2015 Turkish Airlines successfully priced a JPY11.939bn EETC, which was privately placed on 15 September 2015. Mizhuo Securities was the sole bookrunner and structuring agent on the deal.

This was the first Japanese yen denominated EETC globally and the first EETC structure to be combined with a Japanese equity component, which helped bolster the exposure of the airline’s financing structure to new pockets of investors.

Transaction Breakdown

The Anatolia Pass Through Trust (Anatolia Trust) was created to facilitate the issuance of the EETCs on behalf of the owners and lessors of three separate Japanese Operating Lease with Call Option (JOLCO) structures.

Under the structure, Turkish Airlines leased three Airbus A321-200 aircraft from the lessor SPVs. The lessor SPVs borrowed loans from the Anatolia Trust, which issued the EETCs by private placement. The proceeds of the EETCs plus the equity contributions from investors will finance the lessor SPVs’ purchases of the aircraft.

The EETC was split into three tranches: The JPY 8.5bn A-tranche rated “A2” by Moody’s was issued with a coupon of 1.228%, with an initial Loan-to-Value (LTV) of 44%, and initial average life of 7 years with an expected maturity of September 2027. The JPY1.95bn B-tranche rated “Baa2” was issued with a coupon of 1.489%, with an initial LTV of 54%, and initial average life of 5.1 years with an expected maturity of September 2024. The JPY1.5bn unrated C-tranche was issued with a coupon of 2.214%, with an initial LTV of 62%, and initial average life of 4.1 years with an expected maturity of September 2022.

The A-tranche saw 59% participation from public financial institutions, 18% from life insurance companies, 21% from leasing companies and 2% from regional banks. The B-tranche saw 85% participation from life insurance companies and 15% from regional banks. 100% of the C-tranche was placed with public financial institutions.

“By segmenting the risks through multiple tranches we were able to secure participation from a broad range of stakeholders including long term institutional investors, that don’t often engage in airline finance,” said Enis Feyzioğlu, Finance Manager at Turkish Airlines.

“The deal helped introduce Turkish Airlines to more Japanese investors and introduced a fairly novel structure to the country’s market, a boon for aviation finance in general. It also included a solution to manage the fluctuation of foreign exchange rates, while broadening the choices of currencies applicable for EETC financing,” he added.

CEE & Turkey

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