Waterfall Lesson for lecture

Bridgecrest Auto 2025-1 Cash Flow Waterfall
▼ Available Funds Allocation
Class A-1 Notes 4.487%
                Balance: $85,200,000 | Mat: Feb 17, 2026
                Shortest duration tranche, typically structured to meet money market 2a-7 requirements. Receives the first allocation of principal collections until fully retired.
            
Class A-2 Notes 4.710%
                Balance: $122,880,000 | Mat: Sep 15, 2027
                Intermediate duration. Principal payments are entirely locked out until Class A-1 is paid in full, extending the weighted average life.
            
Class A-3 Notes 4.670%
                Balance: $81,920,000 | Mat: Aug 15, 2028
                Longest duration within the senior class. Absorbs principal collections only after both A-1 and A-2 are fully retired, locking in yield for the longest term.
            
▼ Subordinate Cash Flows
Class B Notes 4.920%
                Balance: $65,250,000 | Mat: Mar 15, 2029
                Receives interest allocation after Class A requirements are met. Principal amortizes only after all Class A notes are completely paid off.
            
Class C Notes 5.150%
                Balance: $88,810,000 | Mat: Dec 17, 2029
                Requires all senior and Class B interest obligations to clear the waterfall first. Principal is locked out until Class B is retired.
            
▼ Deep Subordinate Cash Flows
Class D Notes 5.640%
                Balance: $130,500,000 | Mat: Nov 15, 2030
                Serves as the primary credit enhancement via cash flow subordination. Receives principal last among the publicly offered notes.
            
Class E Notes 7.460%
                Balance: $48,940,000 | Mat: Feb 17, 2032
                Deepest debt subordination layer. First to absorb losses if the residual is wiped out. Not priced in the public offering syndicate.
            
▼ Residual Cash Flow
Retained Interest (Reg RR) ≥5.00%
                Balance: ≥ 5% Eligible Horizontal Residual
                Captures excess spread and residual cash flows only after all noteholder interest, principal, and reserve account funding requirements are completely satisfied.
            
Simulation: Monthly Period Cash Flow

            Let's assume $25,000,000 of borrower car payments roll in this month. The waterfall demands its pound of flesh (interest) first, then aggressively pays down principal until the cash runs dry. Welcome to the meat grinder.
        
▼ Starting Balance: $25,000,000
Class A Interest (A-1, A-2, A-3)-$1,119,686
Remaining: $23,880,314
Class B Interest-$267,525
Remaining: $23,612,789
Class C Interest-$381,142
Remaining: $23,231,647
Class D & E Interest-$917,593
Remaining: $22,314,054
Interest Satisfied. Principal Amortization Triggers.
Class A-1 Principal Paydown-$20,000,000
Remaining: $2,314,054
Available Funds Depleted for Principal.
Residual Sweep / OC Build-$2,314,054
Trust Account Balance: $0

DOWNLOAD FINANCIAL MODEL ROUGH DRAFT

OLD DRAFT

Haven’t checked my work, made some time saving assumptions in the PoP. Need to add basic opening ratios from the below.

Coding AI Finance: How Lawyers Shape Debt Capacity in the Innovation Economy

American Airlines 2025-1 EETC | Deal Terms

Deal Terms

American Airlines, Inc. | Series 2025-1 EETC

Pass Through Certificates issued via 2025-1A and 2025-1B Pass Through Trusts, backed by secured equipment notes across a 25-aircraft collateral pool.

Total: $1,104,534,000

Pay Dates: May 11 / Nov 11

Liquidity: 3x interest periods

Bankruptcy: Section 1110

Structure & Timing

Issuer / Format	Pass Through Certificates (EETC) via two trusts (2025-1A / 2025-1B)
Borrower / Obligor	American Airlines, Inc. (equipment notes are full recourse obligations)
Aggregate Amount	$1,104,534,000
Payment Frequency	Semiannual distributions on May 11 and Nov 11
Collateral Pool	25 aircraft, financed as delivered
Escrow / Pre-delivery	Proceeds held in interest-bearing deposits; drawn to purchase equipment notes as aircraft are financed
Liquidity Facility	Interest liquidity sized to cover three semiannual interest payments

Note: Expected vs Legal final distribution dates differ by tranche

Tranches

Class A

S&P / Fitch: A+ / A-

Initial Face$883,625,000

Initial / Max LTV58.0% / 58.0%

Expected Tenor / WAL12.5y / 8.7y

Final ExpectedMay 11, 2038

Final LegalNov 11, 2039

Class B

S&P / Fitch: BBB / BBB-

Initial Face$220,909,000

Initial / Max LTV72.5% / 72.5%

Expected Tenor / WAL9.0y / 6.0y

Final ExpectedNov 11, 2034

Final LegalMay 11, 2036

Enhancement is delivered through tranche subordination, a pooled aircraft collateral package, and dedicated interest liquidity.