Moody’s gives Ba3 to Air Canada notes

Moody's Investors Service said it assigned a Ba3 first-lien senior secured rating to Air Canada's proposed C$300 million senior secured notes.

Air Canada's B1 corporate family, B1-PD probability of default and SGL-2 speculative grade liquidity ratings remain unchanged.

The outlook remains positive.

Proceeds from the new debt issue, the previously announced $720 million first-lien term loan B and cash from the balance sheet will be used to fully refinance Air Canada's existing first- and second-lien secured debt.

The associated Ba3 ratings on the existing first-lien secured debt issues and the B2 rating on the second-lien secured debt will be withdrawn once the new transactions close and the existing debt is fully repaid.

Air Canada's B1 corporate family rating primarily reflects its strong market position in the duopolistic Canadian market, Moody’s expectation that adjusted debt/EBITDA will remain around 4 times, aided by low fuel prices and strong load factors even while rapidly increasing capacity, the agency explained.

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