Approximately $7 million of asset backed securities affected
New York, March 28, 2019 -- Moody's Investors Service ("Moody's") has upgraded the rating of Class A Notes issued by UCAT 2005-1 (UCAT).
The complete rating action is as follows:
Issuer: UCAT 2005-1
Cl. A, Upgraded to Ba1 (sf); previously on Dec 22, 2016 Downgraded to Ba2 (sf)
The upgrade rating action reflects deleveraging of the UCAT class A as it pays down, and our expectation about the prospects for future income to UCAT from the Class A-1 and A-2 Notes issued by Lease Investment Flight Trust (LIFT), Series 2001-1 Notes (the underlying LIFT Notes). As UCAT's class A has paid down, its loan to aircraft value (LTV) ratio, based on the appraisal values associated with the underlying LIFT aircraft, has improved to 33% as of February 2019 from 49% as of April 2018.
In its analysis, Moody's considered future prospects for lease income to the underlying LIFT transaction based on its fleet and recent performance as well as recent market lease rate trends. The aircraft portfolio backing the underlying LIFT Notes consists of eight aircraft with a weighted average age of about 19 years, with a 39% concentration in Boeing 767s, 47% in B737s, and 14% in Airbus 320s weighted by aircraft value. All of the aircraft in the portfolio were manufactured between 1998 and 2000.
Interest and principal payments on the underlying LIFT Notes are allocated to pay UCAT's Class A Interest, Class A principal, Class B-1-A principal and Class B-1-B principal, sequentially in that order. Interest payments on the underlying LIFT Notes are greater than interest payments due to the UCAT Notes, and the resulting excess spread is applied as principal to pay down the UCAT Notes.
The principal methodology used in this rating was "Moody's Approach to Monitoring Pooled Aircraft-Backed Securitizations" published in November 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
Factors that would lead to an upgrade or downgrade of the rating:
Changes to underlying lease rates or aircraft values that differ from historical and current trends.
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.
The analysis relies on a Monte Carlo simulation that generates a large number of collateral loss or cash flow scenarios, which on average meet key metrics Moody's determines based on its assessment of the collateral characteristics. Moody's then evaluates each simulated scenario using model that replicates the relevant structural features and payment allocation rules of the transaction, to derive losses or payments for each rated instrument. The average loss a rated instrument incurs in all of the simulated collateral loss or cash flow scenarios, which Moody's weights based on its assumptions about the likelihood of events in such scenarios actually occurring, results in the expected loss of the rated instrument.
Moody's quantitative analysis entails an evaluation of scenarios that stress factors contributing to sensitivity of ratings and take into account the likelihood of severe collateral losses or impaired cash flows.
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.