S&P lifts Dubai Aerospace

S&P said it upgraded Dubai Aerospace Enterprise Ltd. (DAE) to BB+ from BB and raised the issue-level rating on the company's unsecured debt to BB+ from BB.

The 3 recovery rating remains unchanged, indicating an expectation for meaningful (50%-70%; rounded estimate: 65% capped) recovery in a default scenario. S&P also revised its rounded recovery estimate on the unsecured debt to 65% from 55% due to an increase in DAE's pool of unencumbered aircraft.

S&P said it also raised its issuer credit rating on AWAS Aviation Capital Ltd., an operating subsidiary of DAE, to BB+ from BB and affirmed that entity's secured debt rating at BBB-, with an expectation of very high recovery (90%-100%; rounded estimate: 95%) in a default scenario. The outlook on both entities is stable.

Dubai-based aircraft lessor DAE acquired the larger aircraft lessor AWAS Aviation Capital Ltd. in August 2017. Almost a year later, the integration appears to have been successful despite DAE's decision to shift more functions and personnel to Dubai, S&P noted.

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