[May 26, 2015]

Kroll Bond Rating Agency Releases EETC and Secured Aircraft Debt Rating Methodology

Kroll Bond Rating Agency (KBRA) releases its Enhanced Equipment Trust Certificates and Secured Aircraft Debt Rating Methodology. This rating methodology reviews the key risk factors that KBRA considers in rating full-recourse secured aircraft-debt instruments issued by airlines and aircraft lessors. The rating of airlines and aircraft-leasing companies is covered by KBRA's General Corporate Rating Methodology, published November 15, 2013, and Finance Company Rating Methodology, published April 1, 2013, respectively. Non-recourse or asset-backed transactions backed by aircraft are covered in a separate methodology, Aviation ABS (News - Alert) Rating Methodology, published May 15, 2015.

There are two corporate secured aircraft-debt types covered in this methodology:

• Enhanced Equipment Trust Certificates (EETCs) are the most common form of publicly issued secured debt financing for airlines. They are typically used by a single obligor for securing larger, strategically important pools of aircraft (usually more than 10), tend to have standardized legal and structural, and are often issued in the public market or as 144a debt. Importantly, they are designed to be most effective when issued in jurisdictions that either benefit from the same or better than does Section 1110 U.S. Bankruptcy law.
• Secured Aircraft Debt transactions are issed by both airlines and lessors and are generally backed by fewer aircrafts than are EETCs (as few as one), could have a variety of structural features and enhancements, and are mainly issued in the private market. In general, but not always, such securities are not backed by a particularly strategic pool of aircraft collateral. Jurisdictional frameworks for these securities vary and are often not as clearly defined or tested as those present in EETCs.

Related Publications:

KBRA's General Corporate Rating Methodology

Finance Company Rating Methodology

Aviation ABS Rating Methodology

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

View source version on businesswire.com: http://www.businesswire.com/news/home/20150526006292/en/

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