Moody's may upgrade Avolon

Moody's Investors Service said it is reviewing for upgrade the Ba1 corporate family rating of Avolon Holdings Ltd., along with the Ba2 senior unsecured ratings of Avolon Holdings Funding Ltd. and Park Aerospace Holdings Ltd.

The agency also placed on upgrade review the Baa3 senior secured rating of Avolon TLB Borrower 1 (US) LLC.

This follows news that Avolon may pursue a benchmark senior notes issuance after engaging in a series of calls with investors this week, Moody's explained.

The agency said it is reviewing Avolon's ratings on an expectation that the company's contemplated senior notes issuance could be of sufficient size to further transform its funding structure, reducing its secured debt and increasing its unencumbered assets.

If Avolon is able to reduce its pro forma ratio of debt to tangible assets to 30% or less as a result of such a transaction, Moody's said it would likely upgrade the company's senior unsecured ratings to Baa3.

This would be barring unforeseen developments that could have a negative bearing on the company's credit condition, the agency noted.

The company's ratings are supported by a strong liquidity buffer, considering its debt maturity profile and aircraft purchase commitments, as well as its profitability, Moody's said.

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