Conventional Debt Case Studies

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Essential Role

The Enhanced Equipment Trust Certificate — EETC — is a form of secured debt financing used by airlines to fund the multiple aircraft purchases or leases typically needed to keep their fleets up-to-date and state-of-the-art. Central to the EETC is the role of the depositary holding the debt proceeds for funding the respective aircraft deliveries.

To be eligible as a depositary, an institution is required to demonstrate the highest debt rating handed down by both Moody's and Standard & Poor's. In the wake of the global financial crisis, however, a number of potential depositaries were downgraded; some others that might have qualified on ratings lacked requisite skills in some cases and sufficient capabilities in other cases. So when the lead underwriters on a purchase of 16 new aircraft had arranged the deal and lined up the investors, they found themselves looking around for a sound and stable depositary.

They didn't have to look far. BNY Mellon had the ratings, and its Corporate Trust division had the depositary services expertise and the innovative resourcefulness to complete the transaction. With BNY Mellon Corporate Trust as depositary, the deal closed, and the ageing fleet got its upgrade.

Time for a Change

It's a small, highly specialized U.S. government agency that does essential work. So when it was determined that the trustee reporting for its capital financing program was lacking in terms of accuracy and timeliness, the staff decided to put out a Request for Proposal and make a change.

Answering the call was a partnership that billed itself as "two companies, one voice." One of the companies was a minority-owned investment bank, which would handle underwriting and financial advisory services. The other company was the trustee the investment bank considered the best in the world, BNY Mellon Corporate Trust. Its wide experience in working with the Federal government, expertise in trust services, and unmatched financial strength made it the investment bank's clear choice. The two companies promised a single point of contact into all the capabilities of the partnership.

To the agency staff accountable for every penny of taxpayer money and needing all possible help to do the agency's important work, it was a no-brainer: time to change trustee — and go with the best.

Contingency Planning

Directed by their auditors to create a disaster recovery plan, the administrators of an institution of higher learning in the U.S. sought assistance in creating a backup contingency for data on a new issuance in their debt portfolio. Although not the institution's traditional debt trustee, BNY Mellon Corporate Trust came up with a creative and innovative solution that earned the division the trusteeship of the new issuance:

Right on the bank's own Investor Reporting Web site, the client academic institution posts its electronic files containing all the governing documents, debt service information, and statements on the new issue. This secure data is accessible only to the institution's financial personnel but is readily available should a disaster ever compromise records housed at the institution itself.

Even an Island Needs Liquidity

When the government of a small but prosperous island nation agreed to guarantee shares issued by its biggest bank, the role of the trustee became particularly crucial. At stake was the bank's ability to raise capital in the adverse environment of the global financial crisis. To the bank issuing the shares, to the government guaranteeing them, and to investors buying them, it was essential that the chosen trustee demonstrate both the know-how to process any and all claims and the financial stability that generates confidence.

BNY Mellon Corporate Trust met both criteria.

And when the division's staff scrutinized the documents of the structure and discovered — 24 hours before the scheduled closing — that the local transfer agent was unable to provide the services required, they were able instantly to mobilize the bank's own resources to provide the agent services specified and, at the eleventh hour, rescue the transaction from further delay. It wasn't just expertise; it was the range of expertise the division was able to deploy — and its ability to turn on a dime to deploy it.