Kroll Bond Rating Agency (KBRA) looks back at aircraft ABS primary and secondary market activity, as well as several developing trends and challenges facing the sector.
In general, we believe that aircraft lease fundamentals are on solid footing as the market continues to benefit from increasing demand for air travel, particularly in emerging economies, as well as solid airline fundamentals. Aircraft ABS utilization rates have averaged close to 100% since 2013 and debt service coverage ratios (DSCR) have been trending upward as rising rates have supported higher lease rates in the aggregate. As long as the economy does not meaningfully slow over the next 12 months, aircraft ABS credit fundamentals should remain well contained in 2019.
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