19-Feb-2010 9:21 AM

ILFC downgraded to junk by Fitch

International Lease Finance Corp's (ILFC) Issuer Default Rating (IDR) was downgraded (18-Feb-2010) by Fitch Ratings from 'BBB' to 'BB'. ILFC's ratings remain on 'Rating Watch Negative' (where they were originally placed on 25-Sep-2009), with these actions affecting approximately USD18 billion of debt. Downgrade details are as follows:

  • Rating downgrades:
    • Long-term IDR from 'BBB' to 'BB';
    • Senior unsecured debt from 'BBB' to 'BB';
  • All of ILFC's ratings remain on Rating Watch Negative including the following:
    • Preferred stock 'B'.
  • Fitch downgraded and subsequently withdrawn the following ratings:
    • Short-term IDR  from 'F2' to 'B';
    • Commercial paper  from 'F2' to 'B'.[more]

Fitch Ratings: "ILFC is no longer viewed as a core part of AIG's overall franchise, and the prospect of a near-term sale of ILFC has become more unlikely...The downgrade primarily reflects Fitch's belief that AIG's long-term willingness to extend support to ILFC may be more limited than previously assumed. It also reflects the agency's concern that ILFC's efforts to restructure its capital structure and generate liquidity extend beyond the dates at which AIG has indicated that it will provide financial support. Further, Fitch is increasingly concerned that even if the restructuring is completed as envisioned by ILFC and AIG, the resulting capital structure and business profile may be insufficient to support investment grade ratings...if ILFC is unable to generate sufficient liquidity via assets sales and third-party secured financing and is further required to draw on support from its parent, Fitch believes ILFC's business is at a greater risk of transitioning into a portfolio liquidation scenario in order to preserve liquidity and minimize future funding requirements," Company Statement, 18-Feb-2010.

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