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KBRA Comments on the Potential Impact on our Aviation Ratings from the Aftermath of the Tragic Lion Air Crash

December 4, 2018

NEW YORK--(BUSINESS WIRE)--Dec 4, 2018--Kroll Bond Rating Agency (KBRA) continues to closely follow new leads emerging as to the exact cause of the 737 Max Lion Air crash to potentially update our aircraft value stress assumptions if necessary. KBRA routinely monitors the liquidity of aircraft types in our rated aviation transactions. Whether they are EETCs, Aircraft ABS, or secured aircraft transactions backed by leases to airlines, aircraft grades are one of the key inputs into our calculation of recovery for each transaction.

Once we determine that stress analysis is required to ensure the accuracy of our ratings, KBRA will typically run multiple scenarios reflecting lower liquidity for the aircraft as well as apply other monetary and longer-term consequences this may have for the aircraft owners and renters. In addition, we frequently engage with aircraft appraisal firms, OEMs, and other relevant stakeholders to assess the potential impact of such events for our modeling analysis.

Given the tragic loss of so many lives, a potentially significant monetary liability could arise for both Boeing and Lion Air. As such, KBRA is reviewing its ratings exposure to Lion Air as well. That said, we believe that Boeing would have strong incentives to prevent any technical or operational errors which may prevent the success of this important aircraft in the longer run.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

View source version on businesswire.com:https://www.businesswire.com/news/home/20181204005226/en/

CONTACT: Analytical:

Marjan Riggi, Senior Managing Director

646-731- 2354

mriggi@kbra.comThomas Moore, Analyst

646-731-3375

tmoore@kbra.com

KEYWORD: UNITED STATES NORTH AMERICA NEW YORK

INDUSTRY KEYWORD: PROFESSIONAL SERVICES BANKING FINANCE INSURANCE

SOURCE: Kroll Bond Rating Agency

Copyright Business Wire 2018.

PUB: 12/04/2018 08:30 AM/DISC: 12/04/2018 08:30 AM

http://www.businesswire.com/news/home/20181204005226/en

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