Fitch gives Global Aircraft notes BB-

Fitch Ratings said it assigned an expected BB- rating to Global Aircraft Leasing Co.’s planned $1.95 billion issuance of senior secured payment-in-kind (PIK) toggle notes due 2028 co-issued by GALC and Global Sea Containers Two Ltd. (GSCL II), collectively the co-issuers. The interest rate and maturity date will be determined at the time of issuance.

The agency also gave GALC a BB issuer default rating with a stable outlook.

GALC is a Cayman Islands-exempted company, and holder of 70% of the outstanding ordinary shares of Avolon Holdings Ltd. (rated BBB-/positive). GSCL II is a Bermuda-exempted company and parent company of Global Sea Containers Ltd. (GSCL; not rated).

“The notes benefit from a joint and several guarantees from GALC and GSCL II, as well as a first-priority lien on the equity interests in GSCL and in GALC, owned by Global Aviation Leasing Co., Ltd. (Global Aviation), GALC's parent company,” Fitch said in a press release.

However, “The BB-(EXP) rating assigned to the proposed senior PIK toggle note due 2028 is one-notch below GALC's long-term IDR, reflecting weaker-than-average recovery prospects. Since the notes are not guaranteed by Avolon, Seaco, Cronos, or any of the respective subsidiaries, they are therefore structurally subordinated to all those entities' indebtedness,” Fitch added.

The proceeds will be used to repay outstanding amounts under the $1.911 billion of 6½% cash interest/7¼% PIK interest, senior PIK toggle notes due 2024 issued by GALC.

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