S&P: Fly Leasing loan BBB-

Standard & Poor's said it assigned a BB long-term corporate credit rating to Fly Leasing Ltd., along with a BBB- rating to the proposed $395 million secured term loan that Fly's wholly owned subsidiary Fly Funding II Sarl will issue.

Fly will guarantee the term loan. The recovery rating on the term loan is 1, indicating 90% to 100% expected recovery in a default.

The outlook is stable.

The ratings reflect inherent risks of cyclical demand and lease rates for aircraft, a substantial percentage of encumbered assets and the company's complicated ownership structure, S&P said.

The rating also consider Fly's position as a mid-tier provider of aircraft operating leases, the agency said, and an expectation that the company's credit metrics will improve as its earnings and cash flow benefit from the October 2011 acquisition of 49 aircraft.

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