Fitch rates Aerotranscargo notes BB-

Fitch Ratings said it gave BB- ratings to Aerotranscargo and its planned $300 million of senior unsecured bonds. The recovery rating on the notes is RR4.

“ATC's business model generates strong EBITDA margins and cash flow, although its long-term sustainability remains untested given its recent adoption of long-term charter-based services. ATC has lower cost risk than scheduled air cargo operators or commercial airlines but more than aircraft lessors as it carries some operational risk and shorter contract durations,” the agency said in a press release.

Apart from leases, the planned offering will be the company’s only debt, Fitch noted.

“We believe that ATC has limited funding options versus many aviation operators, given the limited collateral potential of its existing aircraft. As most of its planned capex is discretionary, any difficulties in raising debt in the capital market should not hamper ATC's current level of operations or profitability,” Fitch said.

The outlook is stable.

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