What are enhanced equipment trust certificates?

An enhanced equipment trust certificate (EETC) is one form of ETC that is issued and managed through special purpose vehicles known as pass-through trusts. These special purpose vehicles (SPEs) allow borrowers to aggregate multiple equipment purchases into one debt security.

What are equipment trust certificates backed by?

Equipment trust certificates are typically backed by an asset that can be readily transported and sold. Once the debt has been repaid, ownership of the asset is transferred to the issuer of the certificate.

Do equipment trust certificates have collateral?

Equipment trust certificates (ETCs) are also secured (collateralized) bonds. If a corporation sells a bond backed by equipment they own, they’ve issued ETCs. Collateral could include vehicles, construction equipment, or airplanes.

What is Eetc in aviation?

An ever-popular source of debt finance for airlines, the enhanced equipment trust certificate (EETC) product, has surged in popularity.

Is an EETC an ABS?

Unlike aircraft ABS, which relies on the cash flows of multiple aircraft leased by multiple airlines, an EETC relies on the credit of a single airline and is secured by the selection of aircraft and/or engines in its fleet as collateral.

What is a collateral trust certificate?

A collateral trust bond, also known as collateral trust certificate or collateral trust note, is a bond that is secured by one or more financial assets—such as shares of stock or other bonds—that is deposited and held by a trustee for the holders of the bond.

How big is the aircraft ABS market?

Aircraft ABS issuance neared $9 billion in 2019, 15\% over 2018’s level and a 26\% over 2017. For the past several years, supply has steadily increased to meet rising investor demand, attracting more issuers to the ABS market and driving down funding costs.

Is an ABS a bond?

Asset-backed securities, called ABS, are bonds or notes backed by financial assets. Typically these assets consist of receivables other than mortgage loans,¹ such as credit card receivables, auto loans, manufactured-housing contracts and home-equity loans.

Are trust certificates securities?

A trust certificate is a bond or debt investment, usually issued by a public corporation, that is backed by other assets. The types of company assets that are used to create a trust certificate varies, but most often are other shares of company stock shares or physical equipment.

What is a trust certification?

A certification of trust (or “trust certificate”) is a short document signed by the trustee that simply states the trust’s essential terms and certifies the trust’s authority without revealing private details of the trust that aren’t relevant to the pending transaction.

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