TEXT-S&P rates Aircastle Ltd senior notes 'BB+'
Nov 27 - Standard & Poor's Ratings Services said today that it has assigned its 'BB+' issue rating to Aircastle Ltd.'s $400 million senior notes due 2019. The recovery rating on this issue is '3', indicating our expectation that lenders would receive a meaningful (50%-70%) recovery of principal in the event of a payment default. The company will use proceeds for general corporate purposes, including the purchase of aircraft. The ratings on Stamford, Conn.-based Aircastle reflect its position as a midsize provider of aircraft operating leases and its diversified fleet, as measured by aircraft types and location of lessees. Limiting credit considerations are the company's exposure to cyclical demand for aircraft, fluctuations in lease rates and aircraft values, and weak credit quality of some airline customers. We expect Aircastle's financial profile to remain relatively consistent through 2013, with improving lease rates and fleet additions resulting in higher earnings and cash flow. We believe incremental debt to finance fleet growth will offset this growth. We characterize Aircastle's business risk profile as "fair," its financial risk profile as "significant," and its liquidity as "adequate," as per our criteria. The outlook is stable. We expect Aircastle's financial profile to remain relatively consistent through 2013, with higher earnings and cash flow as a result of fleet additions, offset by incremental debt to finance fleet growth. We could lower the ratings if Europe suffered from a severe economic downturn, resulting in more airline bankruptcies and lower utilization and lease rates, causing funds from operations (FFO) to debt to decline to below the high-single-digit percent area for a sustained period. Alternatively, we could lower the ratings if aggressive capital spending or share repurchases resulted in debt to capital increasing to the mid-70% area. We do not consider an upgrade likely unless the company grows substantially, improving its competitive position and fleet diversity, which could cause us to revise our business risk assessment from the current "fair." RELATED CRITERIA AND RESEARCH -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 RATINGS LIST Aircastle Ltd. Corporate credit rating BB+/Stable/-- Ratings Assigned Aircastle Ltd. Senior Unsecured $400 mil notes due 2019 BB+ Recovery Rating 3 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.