Sept 27 - Standard & Poor's Ratings Services today assigned its 'BBB-'
rating to a proposed issue of US$500 million senior unsecured notes by BOC
Aviation Pte. Ltd. (BBB/Stable/--; axA/--) under its US$2 billion medium-term
notes program. The issue rating is one notch below the corporate credit rating
as BOC Aviation's total secured debt exceeds our notching threshold of 20% of
total assets. The company expects to use the proceeds for new capital spending,
general corporate purposes, and refinancing of existing debt.
The rating on BOC Aviation reflects the company's good cash flow stability
from long leases, sound competitive position, and support from its 100%-owner
Bank of China Ltd. (BOC: A/Stable/A-1; cnAA+/cnA-1). A moderately higher
leverage than that of other rated peers and the industry's exposure to
cyclical demand and aircraft lease rates partly offset these strengths. We
assess BOC Aviation's stand-alone credit profile at 'bbb-'. Our rating
incorporates a one-notch uplift because we consider BOC Aviation to be a
subsidiary with "moderately strategic importance" to BOC.
The stable outlook on BOC Aviation reflects our expectation that the company's
financial risk profile will remain broadly stable through 2014. This is
despite BOC Aviation's substantial capital spending plan that it will fund
through incremental debt. We anticipate that the company will maintain a ratio
of funds from operations to debt of 6%-8% and a ratio of debt to capital of
less than 82%.
RELATED CRITERIA AND RESEARCH
-- BOC Aviation's US$2 Billion Medium-Term Note Program Rated 'BBB-',
Sept. 20, 2012
-- Bank of China Ltd., Dec. 28, 2011
-- Group Rating Methodology And Assumptions, Nov. 9, 2011
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
-- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008
Complete ratings information is available to subscribers of RatingsDirect on
the Global Credit Portal at www.globalcreditportal.com. All ratings affected
by this rating action can be found on Standard & Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in the left
column.
Source: http://news.yahoo.com/p-rates-boc-aviation-senior-unsecured-notes-bbb-152528227--sector.html
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