OREANDA-NEWS. Fitch Ratings has assigned an 'A-(EXP)' expected rating to BOC Aviation Pte Ltd's (BOC Aviation, A-/Stable) proposed issuance of 10-year US dollar senior unsecured notes. The final maturity date in 2026 and a fixed-rate of interest will be determined at the time of issuance. The notes will be issued under the company's current USD5bn global medium-term note (GMTN) programme.

The final rating is subject to the receipt of final documentation conforming to information already received. BOC Aviation plans to use proceeds from the issuance for capital expenditure and general corporate purposes.

KEY RATING DRIVERS
SENIOR DEBT

The notes are rated at the same level as BOC Aviation's Long-Term Issuer Default Rating and existing senior unsecured debt. This is because the notes will constitute direct, unsubordinated and senior unsecured obligations of the company, and will rank equally with all its other unsecured and unsubordinated obligations.

The IDR reflects Fitch's view of a very high probability of extraordinary support to BOC Aviation from its ultimate parent, Bank of China Limited (BOC; A/Stable), if required. This view is based on BOC Aviation's strong links with BOC, which is evidenced by shared branding, a high level of board representation, cross-selling initiatives, and contingency liquidity support. Counterbalancing these factors is BOC Aviation's small size relative to the broader organisation and it operation in a different jurisdiction.

RATING SENSITIVITIES
SENIOR DEBT

The ratings of the senior unsecured notes are sensitive to changes in BOC Aviation's IDR and the level of unencumbered balance sheet assets in a stressed scenario, relative to outstanding unsecured debt. A decline in the level of unencumbered asset coverage combined with a material increase in the use of secured debt could result in the notching between the IDR and the senior unsecured debt.

BOC Aviation's ratings are primarily sensitive to changes in BOC's ratings given the one-notch differential between the IDRs of BOC Aviation and BOC.

Although not expected by Fitch, BOC Aviation's ratings could be adversely affected should BOC seek to dispose of or meaningfully further reduce its investment in BOC Aviation or if there are any other developments within BOC that are perceived by Fitch to alter BOC's willingness or ability to provide support to BOC Aviation. Negative rating action could also be taken if BOC Aviation's operating performance deteriorated, thereby not delivering the return on investment envisaged by BOC, to the extent that this had an impact on Fitch's assessment of the propensity of BOC to provide support to BOC Aviation, if needed.

BOC Aviation is based in Singapore and owned by Bank of China. It is a leading global aircraft operating leasing company with a portfolio of 270 owned and managed aircraft, with total assets of USD12.5bn at end-2015.