Fitch: Macquarie's Ratings Unaffected by Aircraft Purchase
An institutional equity placement of AUD500m and a share purchase plan for retail shareholders are likely to fully offset the acquired portfolio's AUD620m Tier 1 regulatory capital requirement. MGL should maintain its solid capital position as a result of this, which is one of its key rating drivers, as outlined in Fitch's most recent Rating Action Commentary on the group, dated 14 August 2014.
The agency also does not anticipate a material weakening of the group's funding structure and liquidity as a result of the acquisition as MGL's liquidity policy requires long-term assets to be funded with long-term liabilities. The non-equity component of the purchase price will largely be funded through a third party non-recourse facility, with surplus liquidity used for the rest.
Fitch believes the quality of the aircraft portfolio is sound, comprising primarily of in demand, fuel efficient narrowbody aircraft which are locked-in on long term leases (weighted average remaining lease term is 6.5 years). The weighted average age of the aircraft is 2.0 years and narrowbody aircraft accounted for over 90% of the total portfolio. The portfolio is also well diversified by lessee and geographic location. The pro-forma aircraft portfolio within MGL's corporate and asset finance division following the acquisition will have a value of AUD9.5bn and encompass 220 aircraft.
The purchased portfolio accounted for less than 3% of MGL's total assets at 30 September 2014 on a pro-forma basis, while the group expects the acquisition to be earnings per share and return on equity accretive from the first year.
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