Fitch Ratings - Chicago - 19 August 2019: Fitch Ratings has affirmed the notes issued by Willis Engine Structured Trust IV Series 2018-A (WEST IV), backed by commercial aircraft engines, one airframe, and their associated operating leases.
KEY RATING DRIVERS
Strong Asset Quality: The majority of the pool is comprised of high-quality engines that support in-production, in-demand aircraft variants from the A320 current engine option (ceo) and B737 Next Generation (NG) families.
Stable Performance: The affirmation of the class A and B notes reflects stable performance to date. Lease cash flows have been in line with Fitch's initial expectations and the notes are paying according to their schedules. Loan-to-values have increased slightly since closing but are still within expectations.
Cash flow has been adequate to pay full scheduled principal payments on the notes. Cash flow modelling analysis was not conducted for this review, but was completed for the initial rating analysis in August 2018. Per Fitch's criteria, updated modelling analysis need not be completed if it has been done within the last 18 months, transaction performance metrics are in line with prior expectations, and the review is not a result of a performance-based trigger.
Due to the correlation between global economic conditions and the airline industry, the ratings may be impacted by the strength of the macro-environment over the remaining term of this transaction. Global economic scenarios that are inconsistent with Fitch's expectations could lead to rating actions. Fitch, in the initial rating analysis, found the transaction to have limited sensitivity to the timing of the first recession the transaction may experience.
Additionally, changes in the airline industry can have significant impact on the ratings of this transaction. In the initial review, Fitch found the timing or degree of technological advancement in the commercial aviation space to have a material impact on the rating.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.
A description of the transaction's representations, warranties and enforcement mechanisms (RW&Es) that are disclosed in the offering document and which relate to the underlying asset pool was not prepared for this transaction. Offering Documents for this market sector typically do not include RW&Es that are available to investors and that relate to the asset pool underlying the trust. Therefore, Fitch credit reports for this market sector will not typically include descriptions of RW&Es. For further information, please see Fitch's Special Report titled 'Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions'.
Additional information is available on www.fitchratings.com