Kroll Bond Rating Agency noted that the private-placement market for aviation-related debt has become an important component of funding and liquidity for issuers and investors alike.

Kroll Bond Rating Agency noted that the private-placement market for aviation-related debt has become an important component of funding and liquidity for issuers and investors alike. Issuers of aviation debt may use this option for transactions that are either too small or are too bespoke for the broader public markets, or when they enter the financing markets for the first time.

Investors favor private placements for their relatively higher yield, and when they want to match their longer term and fixed rate liabilities. Aircraft-related debt is most often supported by long-term fixed-rate cash flow from leases.

KBRA has built a transparent analytic framework for rating such transactions, which allows issuers efficient and well-thought-out execution of their rating requirements. KBRA strives to implement a transparent and analytic rating approach and process, particularly since such transactions are often more complex in structure and collateral characteristics than public deals. To that end, KBRA has assigned unpublished ratings to more 40 aircraft-backed private placements in the past four years.