This report describes the Kroll Bond Rating Agency, LLC and its rating affiliates (collectively, “KBRA”) rating methodology for rating commercial aircraft and engine leasing asset backed securities (ABS) transactions (together, referred to as “Aviation ABS”).
KBRA views the following factors as key determinants in the rating process of an Aviation ABS transaction:
The composition and quality of the aircraft
The credit strength of the initial lessees
The operational abilities and financial strength of the servicer
Overall leverage and debt amortization profile relative to the projected values of the aircraft
Cash flows derived from lease payments and aircraft sales under stress scenarios
Structural enhancements including, but not limited to, overcollateralization, subordination, liquidity, maintenance reserves, early amortization and debt service cash trap triggers and cash deposits
Jurisdictional risks relating to…
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