Kroll Bond Rating Agency Releases Research Report: EETC Historical Recoveries and Current Outlook

NEW YORK--()--Kroll Bond Rating Agency (KBRA) releases a research report entitled “EETC Historical Recoveries and Current Outlook”. The research makes the following key points:

  • Historical data show that Enhanced Equipment Trust Certificates (EETCs) have a much lower probability of default than airlines, indicating that the EETC structure has successfully de-linked airline credit risk from EETC performance
  • Strong collateral and enhanced structure, coupled with Section 1110 protections, have been the drivers of high EETC recoveries in bankruptcy
  • EETC losses are extremely low despite the number of airline bankruptcies since the product’s inception in 1994, with cumulative loss rates over the past 20 years ranging from 0.1%-3.0%; minimal realized losses suggest that EETC ratings have been too low historically
  • Improved cross-default provisions and low coupons bode well for the future performance of U.S. EETCs that are backed by strategically important aircraft; however, increasing balloon payments could be the biggest risk to EETC recoveries in the future
  • Recent growth of international EETCs is an important development in the maturation of the global market; nevertheless, historical performance cannot be extrapolated to non-U.S. jurisdictions, which have untested legal frameworks

To view the full report, please use the following link:

www.krollbondratings.com/show_report/2958

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).

Contacts

Analytical:
Kroll Bond Rating Agency
Andrew Kabala, CFA, Director
646-731-2447
akabala@kbra.com
or
Joe Lee, Analyst
646-731-2436
jlee@kbra.com
or
Marjan Riggi, Managing Director
646-731-2354
mriggi@kbra.com
or
Christopher Whalen, Senior Managing Director
646-731-2366
cwhalen@kbra.com
or
Follow us on Twitter!
@KrollBondRating

Contacts

Analytical:
Kroll Bond Rating Agency
Andrew Kabala, CFA, Director
646-731-2447
akabala@kbra.com
or
Joe Lee, Analyst
646-731-2436
jlee@kbra.com
or
Marjan Riggi, Managing Director
646-731-2354
mriggi@kbra.com
or
Christopher Whalen, Senior Managing Director
646-731-2366
cwhalen@kbra.com
or
Follow us on Twitter!
@KrollBondRating