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S&P acts on United Airlines certificates
S&P said it acted on the issue-level ratings of six United Airlines Inc. enhanced equipment trust certificates following a review prompted by the publication of new criteria for rating such issues ("Methodology and Assumptions for Rating Aircraft-Backed Debt And Enhanced Equipment Trust Certificates," May 26,). The agency removed its "under criteria observation" indicator from the affected ratings.
“The rating actions on United's EETCs include four one-notch downgrades, a one-notch upgrade, and an affirmation. The downgrade of United's (originally issued by Continental Airlines Inc.) 2001-1 class A certificates was due to reduced affirmation credit dictated by our new criteria in this case. The downgrades of United (Continental) 2012-2 class A, United 2014-1 class A, and United 2014-2 class A certificates were all dictated by a provision in the new criteria that if our ICR on an airline is B or B+ (the ICR on United is B+) and there is a difference of more than 10 percentage points between the loan-to-value (LTV) calculated using appraised base value and a higher (worse) LTV calculated using appraised current market value, then we use an average of those two LTVs,” S&P said in a press release.
The upgrade of United 2007-1 class B certificates to BBB+(sf) from BBB(sf) was because the criteria are now more prescriptive as to how to assign collateral credit, and the combination of collateral quality as it is assessed, and the LTV justified higher collateral credit.
“Lastly, we affirmed United's 2014-1 Class B certificates because the impact of the new criteria was not sufficient to merit a change,” the agency said.
S&P lowered the 6.7% (Continental) 2001-1 class A EETCs to BBB+(sf) from A(sf), the 4% (Continental) 2012-2 class A to BBB-(sf) from BBB(sf), the 4% 2014-1 class A to BBB(sf) from BBB+(sf) and the 3.75% 2014-2 class A to BBB+(sf) from BBB(sf).
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