ALM delivers one A320-200neo to Peach
15th September 2023
Fitch Ratings has placed the outstanding class A, B and C notes of Lunar Aircraft 2020-1 Limited (Lunar) on Rating Watch Negative.
The rating actions on Lunar are driven by the termination of purchase agreements to novate six aircraft in the pool prior to November 23, 2020 (delivery expiry date) which is 270 days after February 27, 2020 (closing date).
This is a credit negative for the transaction as it results in potential higher concentration risks compared to the closing date, and may result in further negative rating actions.
On July 10, a notice was provided to noteholders by the asset manager, who is an affiliate of Sculptor Asset Management, that six aircraft will not be purchased by Lunar as originally planned on the closing date. These related aircraft purchase agreements with third party sellers had either expired or were terminated.
The remaining 12 aircraft in the pool results in notably lower diversification with higher exposure and credit risk to the following: individual aircraft assets; weaker airline lessee credits backing the leases; higher reliance on lease cash flows from the remaining aircraft; elevated risks around the aircraft values; and higher regional and country exposures. All of these factors are notable credit negatives for the transaction.
The aircraft not purchased by Lunar are manufacturer serial numbers (MSN): 1007 (widebody (WB) A330-300; leased to Finnair), 32736 (narrowbody (NB) B737-800; SunExpress), 4150 (NB A320-200; S7 [JSC Siberia Airlines]), 7595 (NB A320-200; JetSMART), 40721 (NB 737-800; Comair); and 60177 (NB 737-800; Nordwind Airlines).
Fitch is awaiting further information from the relevant transaction parties, including the asset manager, and will be conducting a full review and analysis of the transaction and ratings once received.