KBRA releases a report highlighting the payment status of aviation asset-backed securities (ABS). Aviation ABS lease transactions were the hardest hit by COVID-19, from a credit perspective, among all structured finance sectors. Stay-at-home orders, border restrictions, and general travel aversion led to plummeting air demand. This in turn gave rise to a meaningful deterioration in demand for aircraft and transaction cash flow which subsequently resulted in significant rating downgrades across the sector. These performance-based issues were then further exacerbated by the Russia-Ukraine conflict.
As a result of the rebound in travel and recent strength of the current global aviation industry, we reexamine these securities, specifically those that fell behind in scheduled principal and/or experienced interest deferrals. Despite notable improvements among the senior and mezzanine classes, such progress has been exceedingly modest given the time it takes securities to catch up on previously unpaid scheduled principal and/or interest. Many of the more junior bonds remain locked out of all cash flows, continue to defer interest, and are behind on scheduled principal.
In this report, KBRA provides observations across our 63 rated aviation ABS lease transactions, including the principal and interest payment status of 171 KBRA-rated securities, the Russia‑Ukraine conflict exposure, potential implications for aviation ABS, as well as other themes.
Click here to view the report.
Related Reports
- Russia-Ukraine Conflict: Potential Aircraft ABS Implications
- Aviation ABS: Insurance Recoveries Suffer Major Delays
About KBRA
KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.
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Contacts
Preston Boutwell, Associate, ABS Commercial
+1 646-731-2367
preston.boutwell@kbra.com
Michael Lepri, Director, ABS Commercial
+1 646-731-3389
michael.lepri@kbra.com
Alan Greenblatt, Managing Director, ABS Commercial
+1 646-731-2496
alan.greenblatt@kbra.com
Additional Contacts
Eric Neglia, Senior Managing Director, Head of Commercial and Consumer ABS
+1 646-731-2456
eric.neglia@kbra.com
Eric Thompson, Senior Managing Director, Head of Global Structured Finance Ratings
+1 646-731-2355
eric.thompson@kbra.com
Business Development
Rosemary Kelley, Senior Managing Director, Business Development
+1 646-731-2337
rosemary.kelley@kbra.com
Arielle Smelkinson, Senior Director, Business Development
+1 646-731-2369
arielle.smelkinson@kbra.com
