Fitch: Rating Impact Unlikely for Willis Engine Securitization Trust II Indenture Amendment
Fitch has been notified that WEST II intends to amend the trust indenture, which would result in multiple changes. These changes include allowing equity contributions with regard to engine sales and acquisitions, increasing the limit on the amount of engines that can be sold to 50% of the initial portfolio, and increasing or adding certain concentration limits. The changes to concentration limits include adding a limit of 35% for engines leased to Southwest Airlines, as well as a limit for a single Asia/Pacific country of 25%. In addition, the concentration limit for any single lessee other than Southwest would increase to 25%, while the top three lessee concentration limit (excluding Southwest) would increase to 50%. Finally, the Asia/Pacific region concentration would increase to 55%.
These changes are expected to provide the trust greater flexibility in managing the pool of aircraft engines. While Fitch does note that having a relatively high concentration of engines with one lessee could result in a material decrease in cash flow should the lessee's financial condition deteriorate, Fitch believes this is unlikely with regard to Southwest given their current rating of 'BBB+'/Outlook Stable. As such, Fitch does not anticipate that the proposed amendment to the indenture, in and of itself, would adversely impact the rating on the trust.
Fitch currently rates the trust as follows:
Willis Engine Securitization Trust II
--Class 2012-A-1 term notes 'Asf'; Outlook Stable.
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