articles Ratings /ratings/en/research/articles/220315-28-ratings-from-seven-aircraft-abs-transactions-placed-on-watch-negative-on-the-russia-ukraine-conflict-12310612 content esgSubNav
In This List
NEWS

28 Ratings From Seven Aircraft ABS Transactions Placed On Watch Negative On The Russia-Ukraine Conflict

COMMENTS

Scenario Analysis: Refinancing Prospects For Triple-Net Lease Securitizations If Higher Interest Rates Persist

COMMENTS

Scenario Analysis: How North American Corporate Securitizations Fare Amid Higher Refinancing Rates

COMMENTS

Private Credit Could Bridge The Infrastructure Funding Gap

COMMENTS

The Opportunity Of Asset-Based Finance Draws In Private Credit


28 Ratings From Seven Aircraft ABS Transactions Placed On Watch Negative On The Russia-Ukraine Conflict

TORONTO (S&P Global Ratings) March 15, 2022--S&P Global Ratings today placed 28 ratings from seven aircraft asset-backed securitization (ABS) transactions on CreditWatch with negative implications (see list). The CreditWatch placements primarily reflect the transactions' exposure to airlines in Russia and Ukraine.

Of the 25 outstanding commercial aircraft lease ABS transactions rated by S&P Global Ratings, 12 have exposure to airlines domiciled in either of these countries. The exposure, based on reported adjusted base values, ranges from approximately 3% to 21%, with one-to-seven aircraft in individual portfolios (see "S&P Global Ratings Reviews Aircraft ABS Exposure To Russian And Ukrainian Airlines," published Feb. 28, 2022).

The EU and the U.S. sanctions, imposed shortly after the Russia-Ukraine conflict began, require termination of all leases to Russian operators by March 28. For the purposes of this review, we are not making a distinction between the implications of the EU and U.S. sanctions, if any, as most of the aircraft-owning entities in these transactions are based in Europe and will be directly affected by these sanctions. We are also considering exposure to both Russia and Ukraine, even though the sanctions to terminate leases apply only to Russian airlines. We will continue to assess the impact as we get more clarity on the situation, in order to resolve these CreditWatch placements. The lease terminations and repossession of the planes under such a challenging environment may further stress revenue collections for affected securitized transactions, most of which are still recovering from the COVID-19 pandemic.

We interacted with most of the lessors of the affected transactions since the onset of the conflict. Based on those interactions, there were some updates with regards to the actual exposure reported in "S&P Global Ratings Reviews Aircraft ABS Exposure To Russian And Ukrainian Airlines," which we considered in our analysis:

  • One aircraft in a transaction was located outside Russia for a scheduled maintenance event, which will make it less cumbersome to repossess and remarket the aircraft.
  • Three aircraft from one transaction are still within the aircraft acquisition period, and were not transferred to the trust at the time the sanctions were imposed. While this mitigates the transaction form the current risks, it currently leaves the portfolio with three fewer aircraft; however, the portfolio remains fairly diversified.
  • Two transactions with one aircraft each had aircraft located outside the airline's home country.

It is also our understanding from the lessors that all the aircraft at risk (except the six above) are currently located in the respective home country of the airline.

We are only placing six of the 12 transactions that we cited in "S&P Global Ratings Reviews Aircraft ABS Exposure To Russian And Ukrainian Airlines," on CreditWatch negative, as they are the ones with relatively higher exposure to these countries. For the remaining transactions, we believe that the available credit enhancement is sufficient at their current rating levels compared to their relative exposure to these events. We will continue to monitor those transactions and take necessary actions if we see further performance deterioration.

S&P Global Ratings acknowledges a high degree of uncertainty about the extent, outcome, and consequences of the military conflict between Russia and Ukraine. Irrespective of the duration of military hostilities, sanctions and related political risks are likely to remain in place for some time. Potential effects could include dislocated commodities markets -- notably for oil and gas -- supply chain disruptions, inflationary pressures, weaker growth, and capital market volatility. As the situation evolves, we will update our assumptions and estimates accordingly. See our macroeconomic and credit updates here: Russia-Ukraine Macro, Market, & Credit Risks. Note that the timing of publication for rating decisions on European issuers is subject to European regulatory requirements.

To resolve the CreditWatch placements, we will review the transactions over the next 90 days.

Related Criteria

Related Research

Ratings List
Ratings
Issuer name Series Class To From

AASET 2021-1 Trust

2021-1 A A (sf)/Watch Neg A (sf)

AASET 2021-1 Trust

2021-1 B BBB- (sf)/Watch Neg BBB- (sf)

AASET 2021-1 Trust

2021-1 C B (sf)/Watch Neg B (sf)

Castlelake Aircraft Structured Trust 2017-1R

A A (sf)/Watch Neg A (sf)

Castlelake Aircraft Structured Trust 2017-1R

B BBB (sf)/Watch Neg BBB (sf)

Castlelake Aircraft Structured Trust 2017-1R

C B- (sf)/Watch Neg B- (sf)

MAPS 2019-1 Ltd

2019-1 A BBB+ (sf)/Watch Neg BBB+ (sf)

MAPS 2019-1 Ltd

2019-1 B BB+ (sf)/Watch Neg BB+ (sf)

MAPS 2019-1 Ltd

2019-1 C B+ (sf)/Watch Neg B+ (sf)

MAPS 2021-1 Trust

2021-1 A A (sf)/Watch Neg A (sf)

MAPS 2021-1 Trust

2021-1 B BBB (sf)/Watch Neg BBB (sf)

MAPS 2021-1 Trust

2021-1 C BB (sf)/Watch Neg BB (sf)

PK Air 1 LP

A-F A (sf)/Watch Neg A (sf)

PK Air 1 LP

A-R A (sf)/Watch Neg A (sf)

PK Air 1 LP

A-E A (sf)/Watch Neg A (sf)

PK Air 1 LP

B1-F BBB+ (sf)/Watch Neg BBB+ (sf)

PK Air 1 LP

B2-F BBB- (sf)/Watch Neg BBB- (sf)

PK Air 1 LP

B-E BB (sf)/Watch Neg BB (sf)

PK Air 1 LP

C-F BB- (sf)/Watch Neg BB- (sf)

PK Air 1 LP

C-E BB- (sf)/Watch Neg BB- (sf)

PK Air 1 LP

D1-F B- (sf)/Watch Neg B- (sf)

PK Air 1 LP

D-E B- (sf)/Watch Neg B- (sf)

S-JETS 2017-1 Ltd.

2017-1 A BBB (sf)/Watch Neg BBB (sf)

S-JETS 2017-1 Ltd.

2017-1 B BB (sf)/Watch Neg BB (sf)

S-JETS 2017-1 Ltd.

2017-1 C B (sf)/Watch Neg B (sf)

Thunderbolt Aircraft Lease Ltd.

A A- (sf)/Watch Neg A- (sf)

Thunderbolt Aircraft Lease Ltd.

B BB- (sf)/Watch Neg BB- (sf)

Thunderbolt Aircraft Lease Ltd.

C B (sf)/Watch Neg B (sf)
Primary Credit Analyst:Rajesh Subramanian, Toronto + 1 (416) 507 3232;
rajesh.subramanian@spglobal.com
Secondary Contact:Deborah L Newman, New York + 1 (212) 438 4451;
deborah.newman@spglobal.com
Analytical Manager:Ildiko Szilank, New York + 1 (212) 438 2614;
ildiko.szilank@spglobal.com

No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.

 

Create a free account to unlock the article.

Gain access to exclusive research, events and more.

Already have an account?    Sign in