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Fitch Expects to Rate BOC Aviation's USD Senior Notes 'A-'
May 17, 2017 / 2:51 AM / 7 months ago

Fitch Expects to Rate BOC Aviation's USD Senior Notes 'A-'

(The following statement was released by the rating agency) CHICAGO, May 16 (Fitch) Fitch Ratings expects to assign an 'A-' rating to BOC Aviation Limited's (BOC Aviation) proposed U.S. dollar senior unsecured notes. The issuance size, fixed-rate of interest, and final maturity date will be determined at the time of issuance. BOC Aviation plans to use proceeds from the issuance for capital expenditure and general corporate purposes. The notes will be issued under the company's current USD10 billion global medium-term note (GMTN) program. KEY RATING DRIVERS IDR AND SENIOR DEBT The notes are rated at the same level as BOC Aviation's long-term Issuer Default Rating (IDR) and existing senior unsecured debt. This is because the notes will constitute direct, unsubordinated and senior unsecured obligations of the company and will rank equally with all its other unsecured and unsubordinated obligations. The IDR reflects Fitch's view of a very high probability of extraordinary support to BOC Aviation from its ultimate parent, Bank of China Ltd. (BOC; 'A'/Stable), if required. This view is based on BOC Aviation's strong links with BOC, which is evident in the parent's shared branding, high level of board representation, cross-selling initiatives, and contingency liquidity support. Counterbalancing these factors is BOC Aviation's small size relative to the broader organization and the fact that it operates in a different jurisdiction. These factors support Fitch's view that BOC Aviation continues to remain strategically important to BOC, as defined under Fitch's 'Global Non-Bank Financial Institutions Rating Criteria'. Financial issuers deemed to be strategically important subsidiaries are typically rated one-to-two notches below the parent company's long-term IDR. In BOC Aviation's case, the IDR is one-notch lower than BOC's Long-Term IDR of 'A'. RATING SENSITIVITIES IDRS, NATIONAL RATINGS AND SENIOR DEBT The ratings of the notes are sensitive to changes in BOC Aviation's IDR and the level of unencumbered balance sheet assets in a stressed scenario, relative to outstanding unsecured debt. A decline in the level of unencumbered asset coverage combined with a material increase in the use of secured debt could result in the notching between the IDR and the senior unsecured debt. BOC Aviation's ratings are primarily sensitive to changes in BOC ratings, given the one-notch differential between the IDRs of BOC Aviation and BOC. Further, although not expected by Fitch, BOC Aviation's ratings could be adversely affected should BOC seek to dispose of - or meaningfully reduce its investment further in - BOC Aviation, or there are any other developments within BOC which are perceived by Fitch to alter BOC's willingness or ability to provide support to BOC Aviation. Negative rating action could also be taken if BOC Aviation's operating performance were to deteriorate, thereby not delivering the return on investment envisaged by BOC, to the extent that this had an impact on Fitch's assessment of the propensity of BOC to provide support to BOC Aviation, in case of need. BOC Aviation is based in Singapore and owned by BOC. It is a leading global aircraft operating leasing company with a portfolio of 284 owned and managed aircraft, with total assets of USD13.4 billion at end-December 2016. BOC is traded on the Hong Kong Stock Exchange under stock code '2588'. Fitch has assigned the following expected rating: BOC Aviation Limited --Senior unsecured debt 'A-(EXP)'. Fitch currently rates BOC Aviation as follows: BOC Aviation Limited --Long-term IDR 'A-'; --Medium-term note program 'A-'; --Senior unsecured debt 'A-'. Contact: Primary Analyst Johann Juan Director +1-312-368-3339 Fitch Ratings, Inc. 70 West Madison Street Chicago, IL 60602 Secondary Analyst Leo Wah, CFA Director +852 2263 9951 Committee Chairperson Justin Fuller, CFA Senior Director +1-312-368-2057 Date of Relevant Committee: May 12, 2017 Media Relations: Hannah James, New York, Tel: + 1 646 582 4947, Email: hannah.james@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Non-Bank Financial Institutions Rating Criteria (pub. 10 Mar 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

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