Fitch Ratings has taken the following rating actions on --Series A-1 affirmed at 'Asf'; Outlook Negative;
--Series A-2 affirmed at 'Asf'; Outlook Negative;
--Series B affirmed at 'BBBsf'; removed from Rating Watch Negative, Outlook Negative assigned.
Key Rating Drivers
The affirmation of the notes reflects the series' stable loan to value ratio levels which have declined since close, as well as recent positive trends in lease collections. However, the long term Outlook for each series of notes remains Negative as concerns exist regarding the engines' ability to generate sufficient collections and repay the notes under certain stress rating scenarios.
The revision to Rating Outlook Negative from Rating Watch Negative for the series B notes reflects the aforementioned recent positive performance trends. When last reviewed and placed on Rating Watch Negative, declining lease collections had led to draws on the Junior Cash Account and a suspension of class B minimum principal payments. The continuance of these trends would have likely resulted in a negative rating action. In addition, a number of engines at the time were grounded or quickly nearing the end of their lease term, adding another degree of uncertainty regarding future cash flows. While some engines remain available for lease, many leases have been extended, contributing to stabilizing collections. As a result, the Junior Cash Account is now at its required level and principal payments to series B notes have resumed. Nevertheless, the Negative Outlook reflects the series B notes' exposure to structural elements which may again prevent principal distributions to be made if collections decrease or engines rapidly decline in value.
As the aviation industry continues to rebound from the recent recession, assumptions for this transaction may evolve. If the timing of or degree of technological advancement in the commercial aviation space differ materially from Fitch's expectations, rating movements may occur. Additionally, unanticipated changes in engine values may impact structural features which may alter expectations on the different series of notes.
Additional information is available at 'fitchratings.com'.
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Fitch Ratings has taken the following rating actions on
--Series A-1 affirmed at 'Asf'; Outlook Negative;