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TEXT-S&P rates Aviation Capital Group notes 'BBB-'
April 5, 2012 / 8:32 PM / 6 years ago

TEXT-S&P rates Aviation Capital Group notes 'BBB-'

April 5 - Standard & Poor's Ratings Services said today that it has assigned
its 'BBB-' rating to Aviation Capital Group Corp.'s (ACG's) $212 million 6%
senior unsecured notes, Series D, due April 5, 2018, and $28 million 6.8% senior
unsecured notes, Series E, due April 5, 2023. The issues are rated one notch
below the 'BBB' corporate credit rating because of the large percentage of
secured debt in ACG's capital structure (with secured debt and securitizations
equal to about 43% of its total assets as of Dec. 31, 2011). The notes are a
private placement.	
	
The ratings on ACG reflect its position as a major provider of aircraft 	
operating leases, ownership of new-technology aircraft with relatively stable 	
asset values, and potential support from parent Pacific Life Insurance Co. 	
(the rating incorporates one notch credit for such potential support). The 	
inherent risks of cyclical demand and lease rates for aircraft, ACG's fairly 	
high debt leverage, and its substantial, albeit declining, percentage of 	
encumbered assets are limiting credit considerations.	
	
The outlook is stable. The company's 2011 credit metrics were below our 	
expectations. Our ratings incorporate an anticipated improvement in credit 	
ratios, and we could revise our outlook to negative or lower the rating if we 	
come to believe that will not occur. We don't consider an upgrade likely based 	
on the company's weaker-than-expected credit metrics, but we could do so if 	
funds from operations (FFO) to debt increased to the mid-teen percent area 	
from 6% in 2011. We could lower the ratings if we did not expect ACG's 	
earnings and cash flow to recover, resulting in FFO to debt remaining in the 	
mid- to high-single digit percent area.	
	
RELATED CRITERIA AND RESEARCH	
2008 Corporate Criteria: Analytical Methodology, April 15, 2008	
	
RATING LIST	
	
Aviation Capital Group Corp.	
 Corporate credit rating                  BBB/Stable/--	
 Senior unsecured                         BBB-	
	
NEW RATING	
Aviation Capital Group Corp.	
Senior unsecured	
 $212 mil. notes due 2018                 BBB-	
 $28 mil. notes due 2023                  BBB-	
	
	
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.

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