KBRA Releases Research – Loan vs. Lease Aviation ABS: Same Plane, Different Seats
22 Jan 2026 | New York
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.
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