S&P cuts Turkish Airlines certificates

S&P said it lowered Turk Hava Yollari AO’s (Turkish Airlines) 2015-1 enhanced equipment trust certificates to B(sf) from B+(sf).

This downgrade, the agency said, is based on S&P’s new criteria for rating these issues published on May 26.

“This reflected reduced affirmation credit dictated by our new criteria. Firstly, if our ICR on an airline is B or B+ (our ICR on Turkish Airlines is B) and there is a difference of more than 10 percentage points between the loan-to-value (LTV) ratio 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. Secondly, the average LTV exceeds our 85% threshold, resulting in our view of a higher risk that an airline could reject or renegotiate an EETC,” the agency said in a press release.

S&P also removed the under criteria observation indicator from the rating.

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