Kroll Bond Rating Agency (KBRA) released a 2017 Year in Review and 2018 Outlook for aircraft lessors and recourse aviation debt transactions.

2017 marked another milestone year for KBRA’s coverage of aircraft lessors with first time published rating assignments for Avolon and ACG, and Intrepid in early 2018 bringing our total coverage to ten ratings. We also expanded our ratings of secured aircraft by assigning 22 transaction ratings assigned to recourse debt backed either directly by an airline or leases to airlines, or by lessors themselves. This brings our total transaction ratings for recourse aviation debt to 61 since our rating coverage for the sector began in early 2013.

Aviation financing markets remain very robust and though bank financing has so far been the dominant form of credit for the sector in most regions, capital markets for lessors and airlines are poised to expand especially in Asia and Europe where debt investors are just beginning to take interest in this asset class.

KBRA expects debt issuance by lessors and other recourse airline backed debt to continue to be strong with a number of new issuers and structures being rated in 2018. As investors globally become more familiar with this sector we expect that capital markets will follow with wide potential for issuance in the years ahead. As KBRA remains exceptionally active in rating complex and unique structures, we also expect to work on many new innovative financings this year and beyond.

To read the report, please click here.