New York, February 23, 2015 -- Moody's Investors Service affirmed the Ba2 corporate family rating
of AerCap Holdings N.V. (AerCap) and revised the rating
outlook to positive from stable. The ratings of AerCap's
supported subsidiaries were similarly affirmed and outlooks changed to
positive (see complete list below).
RATINGS RATIONALE
Moody's affirmed AerCap's ratings and changed its outlook
to positive to recognize AerCap's progress integrating the operations
of International Lease Finance Corporation (ILFC) and reducing leverage
toward target levels sooner than anticipated.
Since acquiring ILFC in May 2014, AerCap has combined the AerCap
and ILFC workforces while retaining key ILFC employees, transitioned
nearly all ILFC aircraft to lower-tax Ireland, and consolidated
core operating systems. Moody's anticipates that AerCap will
make further strides during 2015 with respect to achieving operating efficiencies
that should reduce combined operating expenses by approximately $100
million per year. AerCap has already achieved its $1 billion
annual earnings objective, on the strength of higher than anticipated
lease revenues and lower funding costs.
AerCap has also steadily decreased its leverage toward its target range
of 2.7x -- 3.0x net debt/adjusted equity. Moody's
anticipates that AerCap's leverage by this measure will decline
to 3x by the end of 2015 from 3.4x at year end 2014, even
as the company repurchases up to $250 million of shares during
the year. Moody's measure of AerCap's leverage at the
end of 2014 is a moderately higher 4.1x because the agency provides
less equity credit for the company's trust preferred securities
and does not net cash against outstanding debt.
AerCap has strengthened its liquidity during the past year by increasing
the size and extending the maturity of key liquidity facilities.
AerCap's ratio of available sources (including operating cash flow)
to debt service plus aircraft acquisition commitments increased to 1.6x
at year end 2014, above its 1.2x target. Moody's
estimates that AerCap has about 18 months of liquidity in a stress scenario
that assumes no access to the capital markets.
Constraints on AerCap's ratings include performance risks stemming
from its ongoing integration of ILFC, significant speculative aircraft
purchase commitments, and reliance on market funding.
Moody's could upgrade AerCap's ratings if the company's integration
of ILFC continues to progresses favorably, its financial performance
benefits from anticipated operating synergies, it maintains strong
liquidity, and if adjusted leverage (per AerCap's calculation) declines
to the company's 3x target and Moody's effective leverage declines to
less than 3.5x.
We could downgrade AerCap's ratings if the company's operating
prospects weaken, it encounters meaningful difficulties placing
under lease the aircraft scheduled to deliver in coming periods,
liquidity weakens, or leverage increases from current levels.
AerCap is a major commercial aircraft leasing company with headquarters
in the Netherlands and listed on the New York Stock Exchange (AER).
Ratings affected by today's action include the following:
AerCap Holdings N.V.:
Outlook: to positive from stable
Corporate Family: affirmed at Ba2
AerCap Ireland Capital Limited:
Outlook: to positive from stable
Backed senior unsecured: affirmed at Ba2
Delos Finance SARL:
Outlook: to positive from stable
Backed senior secured bank credit facility: affirmed at Ba1
Flying Fortress Inc.:
Outlook: to positive from stable
Backed senior secured bank credit facility: affirmed at Ba1
ILFC E-Capital Trust I:
Outlook: to positive from stable
Backed preferred stock: affirmed at B1(hyb)
ILFC E-Capital Trust II:
Outlook: to positive from stable
Backed preferred stock: affirmed at B1(hyb)
International Lease Finance Corporation:
Outlook: to positive from stable
Senior unsecured: affirmed at Ba2
Senior unsecured shelf: affirmed at (P)Ba2
Senior secured: affirmed at Ba1
Preferred stock: affirmed at B1(hyb)
The principal methodology used in these ratings was Finance Company Global
Rating Methodology published in March 2012. Please see the Credit
Policy page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
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 rating action on the support provider and in relation to each particular
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 rating action, and
whose ratings may change as a result of this 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.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Mark L. Wasden
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Robert Franklyn Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's changes AerCap's rating outlook to positive