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PRESS RELEASE from provider: Business Wire
This content is a press release from our partner Business Wire. The AP newsroom and editorial departments were not involved in its creation.

KBRA Assigns BBB Rating to Air Lease Corporation’s Series A Preferred Stock

February 26, 2019

NEW YORK--(BUSINESS WIRE)--Feb 26, 2019--Kroll Bond Rating Agency (KBRA) assigns a debt rating of BBB with a Stable Outlook to the non-cumulative perpetual preferred stock to be issued by Air Lease Corporation (“AL” or “the Company”), an aircraft leasing company headquartered in Los Angeles, California. KBRA most recently affirmed Air Lease’s issuer rating and senior unsecured debt rating of A- on December 14, 2018. The BBB rating of the preferred shares is two notches below the issuer and senior unsecured debt rating of A-.

The proposed preferred shares qualify to receive 75% equity credit for the purposes of leverage calculation. The two-notch reduction from AL’s senior unsecured debt rating reflects the deeply subordinated features of the preferred shares indicated by their ranking in the capital structure, their discretionary and non-cumulative dividend feature and their perpetual nature. If dividends on the preferred shares are in arrears, dividends on any parity securities as well as other more subordinated securities may not be paid. The 75% equity credit indicates that the preferred securities are highly loss absorbing given their structural features which will protect senior creditors for credit losses to some extent.

It is worth noting that AL is a highly rated entity with a high unencumbered asset base comprising of highly liquid aircraft assets as well as relatively low leverage (2.4x as of December 31, 2018). If the credit profile of AL deteriorates and results in a lower rating, the notching differential may potentially be wider. On the other hand, the Company indicated that it does not intend to issue any other form of hybrid securities or subordinated debt in the future. Should AL issues other forms of subordinated debt or hybrid securities, KBRA will review the notching and equity credit given. Finally, KBRA considers the quality of equity when assigning ratings and limits the amount of equity credit given to hybrid securities based on the total level of capital including common stocks of the Company.

Air Lease intends to use the proceeds of the issuance for general corporate purposes, which may include the purchase of aircraft or the repayment of existing indebtedness. Dividends will accrue at a fixed rate for the first 5 years and then accrue at a floating rate thereafter. Dividends are discretionary and non-cumulative. The preferred stock will rank senior to AL’s common stock and junior to all AL’s existing and future debt obligation. If dividends of the preferred shares are in arrears, dividends on any parity securities and subordinated securities may not be paid.

The A- issuer and senior unsecured ratings of Air Lease are supported by strong financial fundamentals, as reflected by a low leverage strategy, strong profitability, liquidity and cash-flow metrics, and largely unencumbered asset base. The ratings also take into account Air Lease’s strong management profile and the growing strength of its global franchise, which is backed by a young and in-demand fleet, a diverse customer base, substantial forward lease placement of orders, and a strong order book. The ratings are further supported by the stable outlook of the global aircraft leasing industry. These strengths are balanced by the disciplined funding and placement planning required to manage the significant order book, an element of key-man risk despite good succession planning, the cyclical nature of the industry, potential credit quality issues in the airline industry as a whole, and event risks related to air travel in general.

The ratings are based on KBRA’s Global Finance Company Rating Methodology published on November 28, 2017.

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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/20190226005925/en/

CONTACT: Analytical Contacts:

Danise Chui, Senior Director

(646) 731-2406

dchui@kbra.com

Marjan Riggi, Senior Managing Director

(646) 731-2354

mriggi@kbra.com

KEYWORD: UNITED STATES NORTH AMERICA NEW YORK

INDUSTRY KEYWORD: PROFESSIONAL SERVICES BANKING FINANCE

SOURCE: Kroll Bond Rating Agency

Copyright Business Wire 2019.

PUB: 02/26/2019 12:12 PM/DISC: 02/26/2019 12:12 PM

http://www.businesswire.com/news/home/20190226005925/en