KBRA Releases Research – Aircraft Engine-Backed Financing Gains Momentum With Institutional Investors

NEW YORK--()--Kroll Bond Rating Agency (KBRA) releases its Aircraft Engine-Backed Financing Gains Momentum With Institutional Investors report, which discusses how the airline sector has become proficient at tapping into new sources of funding including issuance backed by engines.

Banks have generally dominated engine-related financing through favorable financing rates for such assets. However, institutional investors have recently become interested in engines as an asset type given their long-term nature, fungibility, and replenishable value. As a result, an increasing number of carriers and lessors are looking to these assets as collateral for capital market funding.

KBRA notes that airlines and engine lessors have different borrowing requirements, with the type of engine-backed debt varying between issuers. Airlines favor issuing via enhanced equipment trust certificates (EETCs) and secured term loans, while engine lessors typically finance through asset-backed securities (ABS) backed by a large engine pool on lease to a diversified portfolio of airlines.

This comment provides a summary of certain unique characteristics of engines and gives clarity on the key risk factors that KBRA considers in rating EETCs, secured loans, and ABS for engines.

To view the report, click here.

Related Publications: (available at www.kbra.com)

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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. KBRA is also 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.

Contacts

Analytical Contacts:

Boris Alishayev, Director
(646) 731-2484
balishayev@kbra.com

Alan Greenblatt, Senior Director
(646) 731-2496
agreenblatt@kbra.com

Marjan Riggi, Senior Managing Director
(646) 731-2354
mriggi@kbra.com

Contacts

Analytical Contacts:

Boris Alishayev, Director
(646) 731-2484
balishayev@kbra.com

Alan Greenblatt, Senior Director
(646) 731-2496
agreenblatt@kbra.com

Marjan Riggi, Senior Managing Director
(646) 731-2354
mriggi@kbra.com