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KBRA Assigns A Rating to Aviation Capital Group LLC Senior Unsecured Notes

November 28, 2018

NEW YORK--(BUSINESS WIRE)--Nov 28, 2018--Kroll Bond Rating Agency (KBRA) has assigned a senior unsecured rating of A with a Stable Outlook to the senior unsecured notes announced today to be issued by Aviation Capital Group LLC (“ACG” or “the Company”), an aircraft leasing company headquartered in Newport Beach, California. The company intends to use the proceeds for general corporate purposes, which may include the purchase of aircraft and repayment of existing debt. KBRA previously assigned ACG an issuer rating and a senior unsecured debt rating of A on December 5, 2017.

The notes will be ACG’s senior unsecured general obligations and will rank equally in right of payment with its existing and future senior unsecured indebtedness. The notes will rank senior in right of payment to any future subordinated unsecured indebtedness and will be effectively subordinated to its existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness. The notes will be structurally subordinated to all existing and future indebtedness and other liabilities of our subsidiaries.

KBRA considers ACG’s stand-alone credit profile to be A-, which reflects the Company’s long and stable track record, strong market position, experienced management team, prudent risk management culture and relatively low leverage metrics comparable to other highly rated aircraft leasing companies. These strengths are balanced by the need for additional equity for continuous significant growth, the recent increase in impairment charges in 2016 and 2017, the cyclical nature of the industry and potential credit issues of airline customers, and event risks in general. The A issuer and senior unsecured ratings of ACG benefit from the strong credit profile of its majority shareholder, Pacific Life Insurance Company (Pacific Life) and the strategic importance of ACG to Pacific Life. In KBRA’s view, ACG provides Pacific Life a great source of uncorrelated business and earnings diversification, taxable deductions through depreciation expenses for flight equipment and relatively high return on equity. In addition, the ongoing involvement of Pacific Life in ACG’s strategic direction, the long and close relationship between the two as well as Pacific Life’s publicly stated intent to remain the majority shareholder in the event of a successful partial initial public offering (IPO) of ACG all evidence the strategic importance of ACG to Pacific Life.

The ratings are based on KBRA’s , published November 28, 2017. The financial strength of Pacific Life is evaluated based on KBRA’s , published October 10, 2017.

KBRA’s rating report for ACG is available .

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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/20181128005688/en/

CONTACT: Analytical Contacts:

Danise Chui, Senior Director

(646) 731-2406

dchui@kbra.comMichael Dodge, Associate Director

(646) 731-3349

mdodge@kbra.comMarjan 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 2018.

PUB: 11/28/2018 01:58 PM/DISC: 11/28/2018 01:58 PM

http://www.businesswire.com/news/home/20181128005688/en

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