S&P Global has assigned Phoenix Aviation Capital (PAC) a B rating, with outlook stable.
“The B issuer credit rating incorporates our view that PAC is a small aircraft lessor with a limited track record, though its order book supports growth plans,” said S&P.
“PAC is smaller than most aircraft lessors we rate, with an owned fleet of 17 aircraft and an order book of 30 narrowbody aircraft from Boeing.”
The aircraft lessor intends to issue a $592 million senior secured term loan B to repay its existing warehouse facility and fund upcoming aircraft deliveries. S&P issued a B+ rating and a 2 recovery rating on the proposed term loan.
Fitch Ratings assigned an expected long-term debt rating of BB- with a recovery rating of RR2 on the proposed term loan. The agency reaffirmed its B rating with stable outlook for Phoenix.
The lessor has eight lessees and its top five lessees account for over 80% of its net book value.
“We expect that to gradually improve as the company grows its fleet,” said S&P. It added that its expects PAC to complement its growth strategy with “opportunistic portfolio trades” in the secondary market and through sale and leaseback deals.
Ongoing supply chain constraints and aircraft delivery delays are expected to further support PAC's lease rates and aircraft values.
With the ramp up of its fleet, the company's credit metrics are expected to improve, though S&P said these will “remain relatively weak” compared to those of larger lessors.
Phoenix is based in Dublin and is managed by AIP Capital. In June this year, both Phoenix and AIP closed a $550 million senior unsecured notes offering. The proceeds were used to repay outstanding amounts under its existing term loans.