Moody’s downgrades Fly Leasing
Moody's Investors Service has downgraded the debt of aircraft lessor Fly Leasing and changed the outlook for its long-term senior unsecured debt to ‘negative’ on liquidity concerns.
The New York-based rating agency downgraded Fly’s long-term senior unsecured rating to B3 from B1 previously, while the rating on a senior secured bank credit facility for Fly Funding II was downgraded to Ba3 from Ba2.
This followed a review initiated on 4 June to evaluate the impact of the global downturn in air travel on Fly’s credit profile.
“Fly does have substantial unencumbered assets and cash to address its $325m senior unsecured notes maturing in October of next year but anticipated decline in earnings and cash flow will further pressure its already levered financial risk profile,” Moody’s vice-president Inna Bodeck said.
In August, Fly said it was considering buying back a portion of the $325 million notes due to mature in October next year as they were trading at a discount and as a result “we would consider buying some of those back at some point”.
Also last month, Fly chief executive officer Colm Barrington said that the lessor had “very significant” liquidity, with nearly $900 million of cash and unencumbered assets.
Fly reported net income of $9.6 million for the second quarter of 2020. That compared with net income of $54.1m for the same period in 2019. Income for the first half of 2020 was roughly half of the prior-year amount.
Fly has no outstanding aircraft orders or other major capital commitments and no significant near-term refinancing requirements, it said.
Fly has high exposure to airlines in Southeast Asia and South Asia, which represent the majority of its asset values, Airfinance Journal Fleet Tracker data shows. The lessor has many aircraft on lease to Air Asia group and Lion Group carriers, and also to Malaysia Airlines and Garuda.