S&P rates Nordic Aviation, notes, loan B

S&P said it assigned B ratings to Nordic Aviation Capital DAC, and its secured term loan and secured notes issued through subsidiary NAC Aviation 29 DAC. The recovery rating on the loan and notes is 3, indicating meaningful recovery (50%-70%, rounded estimate: 65%) in default.

Both companies plan to emerge from bankruptcy protection under Chapter 11 in early June with new owners.

“The company's position as the largest regional aircraft lessor is offset by its weaker customer base and aircraft portfolio characteristics than for other aircraft lessors. After emergence, we expect NAC to have 353 owned and managed aircraft and about 37 aircraft on order. As of Dec. 31, 2021, the weighted-average age of its fleet was about 8.8 years, somewhat older than the aircraft leasing industry's typical five to eight years, and the average remaining lease term of 3.7 years is less than the typical five to eight years for the industry,” S&P said in a press release.

The outlook is stable, reflecting the forecast that credit metrics will recover modestly over the next few years along with passenger traffic, stronger demand for aircraft, and the resumption of lease payments in full after restructurings, the agency said. However, S&P said it sees NAC’s credit metrics staying below pre-pandemic levels.

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