Kroll Bond Rating Agency assigned issuer and senior unsecured ratings of A to Aviation Capital Group, an aircraft leasing company headquartered in Newport Beach, CA. The outlook on the ratings is stable.
KBRA considers ACG’s stand-alone credit profile to be A-, which reflects the company’s long and stable track record, strong market position, experienced management team, prudent risk management culture and relatively low leverage metrics comparable to other highly rated aircraft leasing companies. These strengths are balanced by the need for additional equity for continuous significant growth, the recent increase in impairment charges in 2016 and 2017, the cyclical nature of the industry and potential credit issues of airline customers as well as event risks in general.
The A issuer and senior unsecured ratings of ACG benefit from the strong credit profile of its majority shareholder, Pacific Life Insurance Company, and the strategic importance of ACG to Pacific Life. In KBRA’s view, ACG provides Pacific Life a great source of uncorrelated business and earnings diversification, taxable deductions through depreciation expenses for flight equipment and relatively high return on equity. In addition, the ongoing involvement of Pacific Life in ACG’s strategic direction, the long and close relationship between the two as well as Pacific Life’s publicly stated intent to remain the majority shareholder in the event of a successful partial initial public offering of ACG all evidence the strategic importance of ACG to Pacific Life.
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