Fitch Expects to Rate International Lease Finance Corp's Unsecured Notes 'BB'

NEW YORK--()--Fitch Ratings expects to assign a rating of 'BB' to International Lease Finance Corp.'s (ILFC) benchmark size senior unsecured notes issuance under its shelf registration. The proposed notes are being issues in two tranches, with maturities in 2018 and 2021.

KEY RATING DRIVERS

The expected debt issuance does not affect ILFC's existing long-term Issuer Default Rating (IDR) of 'BB' or debt ratings. The Rating Outlook for ILFC remains Stable. For further information on ILFC's existing ratings, please refer to Fitch's press release 'Fitch Affirms International Lease Finance Corp's Ratings on Potential Sale' dated Dec. 10, 2012.

Fitch notes that the proposed issuance is consistent with ILFC's overall financing plans to repay near-term maturing debt obligations and for general corporate purposes.

The notes are expected to rank equally in right of payment with existing senior unsecured debt. Covenants are expected to be consistent with previously issued senior unsecured debt including a limitation restricting ILFC's ability to incur liens to secure indebtedness in excess of 12.5% of ILFC's consolidated net tangible assets (excluding secured debt issued by certain non-restricted subsidiaries of ILFC).

RATING SENSITIVITIES

In December 2012, ILFC's parent, American International Group, entered into an agreement to sell a majority stake in ILFC to a consortium of Chinese firms. Many details of the proposed transaction have yet to be finalized and Fitch will continue to assess the potential changes to ILFC's corporate governance and long-term strategy. A meaningful change in ILFC's growth plans may influence Fitch's long-term view of the ratings. Furthermore, any adverse impact on the company's current funding facilities or future availability of credit may have a negative impact on its ratings.

ILFC's ratings are constrained by the company's lack of profitability over the past two fiscal years, which has been caused by significant impairment charges on older aircraft, as well as the weighted average age of its fleet, which is older than other Fitch-rated peers. In addition to the factors outlined above, negative momentum for the ratings and/or Outlook could result from inability to access capital markets to fund debt maturities or purchase commitments, deterioration in operating cash flow or a permanent increase in balance sheet leverage.

While positive rating momentum is not likely in the near term, over a longer-term time horizon, positive drivers would include consistent profitability, demonstrated funding flexibility, commitment to reduced leverage levels and a robust corporate governance structure.

ILFC is a market leader in the leasing and remarketing of commercial jet aircraft to airlines around the world. As of Dec. 31, 2012, ILFC owned an aircraft portfolio with a net book value of approximately $35 billion, consisting of 919 jet aircraft, on lease to approximately 200 customers in over 80 countries.

Fitch expects to assign the following ratings:

--Proposed benchmark size senior unsecured notes due 2018 at 'BB'.

--Proposed benchmark size senior unsecured notes due 2021 at 'BB'.

Fitch currently rates ILFC and its related subsidiaries as follows:

International Lease Finance Corp.

--Long-term IDR 'BB'; Outlook Stable;

--$3.9 billion senior secured notes 'BBB-';

--Senior unsecured debt 'BB';

--Preferred stock 'B'.

Delos Aircraft Inc.

--Senior secured debt 'BB'.

Flying Fortress Inc.

--Senior secured debt 'BB'.

ILFC E-Capital Trust I

--Preferred stock 'B'.

ILFC E-Capital Trust II

--Preferred stock 'B'.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria', Aug. 15, 2012;

--'Finance and Leasing Companies Criteria', Dec. 11, 2012.

Applicable Criteria and Related Research

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181

Finance and Leasing Companies Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696720

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Contacts

Fitch Ratings
Primary Analyst
Ilya Ivashkov, CFA, +1-212-908-0769
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Mohak Rao, CFA, +1-212-908-0559
Director
or
Committee Chairperson
Nathan Flanders, +1-212-908-0827
Managing Director
or
Media Relations
Brian Bertsch, +1-212-908-0549
brian.bertsch@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Ilya Ivashkov, CFA, +1-212-908-0769
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Mohak Rao, CFA, +1-212-908-0559
Director
or
Committee Chairperson
Nathan Flanders, +1-212-908-0827
Managing Director
or
Media Relations
Brian Bertsch, +1-212-908-0549
brian.bertsch@fitchratings.com