NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded Blade Engine Securitization LTD as follows:
--Series A-1 to 'BBBsf' from 'Asf'; Outlook to Stable from Negative;
--Series A-2 to 'BBBsf' from 'Asf'; Outlook to Stable from Negative;
--Series B to 'BBsf' from 'BBBsf;' Outlook Negative.
KEY RATING DRIVERS
The downgrade of the notes reflects recent performance and deteriorating asset quality of the portfolio. A substantial percentage of the pool supports older technology engines which Fitch expects to experience deteriorating cash flows in the future. As such, future collections on the portfolio of assets will be largely dictated by engines that support widebody aircraft. However, series A is still consistent with an investment grade rating. The Negative Outlook on class B reflects the numerous draws on the Junior Cash account to pay class B interest and its subordinated position in the waterfall.
Due to the correlation between the global economic conditions and the airline industry, the ratings may be impacted by the strength of the macro-environment over the remaining term of the transaction. Global economic scenarios that are inconsistent with Fitch's expectations could lead to further negative rating actions. For example, the occurrence of an extended global recession of significantly greater severity than the last two experienced, and the resulting strain on engine lease cash flow, could lead to a downgrade of the notes.
In addition, changes in the airline industry can have a significant impact on the ratings of this transaction. If the timing of or degree of technological advancement in the commercial aviation space differs materially from Fitch's expectations, a rating movement may occur. Similarly, factors influencing the supply and demand for the engines in the trust's portfolio could directly impact Fitch's view of the transaction.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria available on Fitch's web site at www.fitchratings.com:
--'Global Rating Criteria for Aircraft Operating Lease ABS,' dated April 11, 2014
--'Global Structured Finance Rating Criteria,' dated Aug. 4, 2014
--' Blade Engine Securitization Ltd. Series 2006-1A and 2006-1B,' dated Aug. 15, 2006
Applicable Criteria and Related Research:
Blade Engine Securitization Ltd. Series 2006-1A and 2006-1B
Global Structured Finance Rating Criteria
Global Rating Criteria for Aircraft Operating Lease ABS - Effective Apr. 25, 2011 to Apr. 17, 2012