Fitch: New Aircraft ABS Likely as Performance Stabilizes

NEW YORK—(BUSINESS WIRE)—Link to Fitch Ratings’ Report: Aircraft ABS Structures Evolve as New Issuance Takes Off

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=775068

Aircraft ABS is positioned for additional issuance headed into 2015 as the outlook for the sector continues to stabilize, according to Fitch Ratings in a new report.

Fitch expects stable asset and rating performance for recent vintage aircraft ABS securitizations in the near term thanks to improved global commercial air travel industry fundamentals, strong asset quality and adequate credit enhancements to weather future volatility. These conditions, combined with the increased need for capital markets financing for lessors will likely lead to increased issuance, according to Senior Director Brad Sohl.

‘2014 has seen three aircraft lease securitizations and many market participants expect multiple more in the coming year,’ said Sohl. ‘Meanwhile, EETC issuance remains a viable source of funding with lessors and airlines both seeking capital markets solutions to fund record upcoming deliveries.’

Competition in the aircraft leasing market is also an evolving issue. New entrants to aircraft leasing are stoking a more competitive environment, particularly in the Asia-Pacific region. The low cost of funds and aggressiveness of certain new entrants could have an influence on market lease rates.

The prospect of rising interest rates could also have a positive impact on performance for certain aircraft ABS securitizations. ‘Aircraft ABS transactions with fixed rated liabilities or capped liabilities in particular could benefit from rising interest rates,’ said Sohl.

Fitch’s ‘Aircraft ABS Update’ is available at ‘www.fitchratings.com’ or by clicking on the above link.

Additional information is available at ‘www.fitchratings.com’.