KBRA assigns preliminary ratings to Merit Aviation 2026-2 Designated Activity Company and Merit Aviation 2026-2 LLC (Merit 2026-2 or the Issuer), an aviation loan ABS transaction. Merit 2026-2 represents the second aviation loan ABS securitization serviced by Merit AirFinance, L.P. (Merit, the Company or the Servicer), a direct subsidiary of Castlelake, L.P. (Castlelake). The Merit AirFinance platform, which was founded in 2025, provides financing to airlines and leasing companies for new and used aviation assets. The Company’s principal office is in New York. As of September 30, 2026, Merit has closed or been mandated on 14 facilities and 96 individual loans. Merit will retain 100% of the equity of the subject transaction at closing.
Proceeds from the Notes will be used to acquire a portfolio of 13 loan facilities (the Facilities) comprised of secured notes and loans (the Collateral Obligations, and together with the Facilities, the Portfolio). The 13 Facilities are limited recourse (71.4% by loan balance) and full recourse (28.6% by loan balance). As of October 31, 2026 the Portfolio had an initial aggregate loan balance of approximately $655.0 million, an average Collateral Obligation balance of $11.9 million, and a weighted average remaining loan term of approximately 5.8 years. The Portfolio has a weighted average seasoning of approximately 1.9 months.
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Methodologies
- ABS: Aviation ABS Global Rating Methodology
- ABS: General Global Rating Methodology for Asset Backed Securities
- Structured Finance: Global Structured Finance Counterparty Methodology
Disclosures
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
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Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the US Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. Kroll Bond Rating Agency Japan K.K. is registered as a CRA with the Japan Financial Services Agency. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.
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