KBRA Upgrades and Subsequently Withdraws Fly Leasing Limited’s Issuer Rating; Withdraws the Senior Unsecured Debt Rating

KBRA upgrades the issuer rating of Fly Leasing Limited (“Fly” or “the Company”) to B- from CCC and revises the Outlook to Stable from Negative. Subsequently, KBRA withdraws the rating at the issuer’s request. In addition, KBRA withdraws the CCC- senior unsecured debt rating following the repayment of Fly’s senior unsecured notes (the “Notes”) in October 2024.

Key Credit Considerations

The upgrade and revised Outlook of the issuer rating prior to its withdrawal reflect the Company’s repayment of its near-term debt maturities and reduced leverage of 2.3x Debt-to-Equity as of June 30, 2024 (2Q24), down from previously elevated levels, driven, in part, by capital contributions from Fly’s sponsor, a fund managed by Carlyle Aviation. The upgrade also considers the Company’s improved earnings profile driven by the global recovery of air travel. The previous CCC issuer rating reflected the Company’s repurchases of a portion of its Notes at significant discounts in the secondary market which began in 2022. The issuer rating is constrained by the Company’s limited available liquidity ($21 million of unrestricted cash and no revolving credit facility at 2Q24), reliance on secured debt financing with limited unencumbered assets, a material level of portfolio non-accruals and KBRA’s expectation that Fly will continue to reduce its fleet over time with aircraft sales. Fly’s sponsor contributed significant additional capital in recent years which supported the Company’s repurchases of its Notes. However, the rating does not contemplate ongoing external support from the sponsor which has no contractual requirement to provide support.

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