Fitch: BOC Aviation's MTN Program Rating Not Affected by Disclosure Updates
The supplemental offering circular includes recent company developments, interim financial statements for the first-half of 2016, and updated disclosures to the original offering circular, dated April 14, 2016. There have been no other changes to the terms and conditions governing the GMTN program.
Fitch affirmed BOC Aviation's ratings with a Stable Rating Outlook in July 2016 in conjunction with a broader aircraft leasing peer review, which included five publicly rated firms. The rating affirmations and Stable Outlook reflect Fitch's continued expectation of a very high probability of extraordinary support from BOC Aviation's ultimate parent, Bank of China Ltd. (BOC; 'A'/Outlook Stable), if required.
In June 2016, BOC Aviation completed a partial listing of its shares on the Main Board of the Hong Kong Stock Exchange to institutional and retail investors. In total, the company raised approximately $550 million of net proceeds, which is expected be used to support near-term growth of the aircraft portfolio.
At the completion of the offering, BOC's ownership of BOC Aviation was reduced to 70% of the pro forma share capital from 100%. While the change in ownership composition is viewed by Fitch as incrementally negative, Fitch views BOC's continued majority ownership, shared branding, and strategic support for the bank's broader efforts in aviation finance remain as continuing to support the one notch rating differential between BOC ('A'/Outlook Stable) and BOC Aviation, as a strategically important subsidiary defined under Fitch's 'Global Non-Bank Financial Institutions Rating Criteria'.
Fitch currently rates BOC Aviation as follows:
BOC Aviation Limited
--Long-term Issuer Default Rating 'A-';
--Medium-term note program 'A-';
--Senior unsecured notes 'A-'.
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