Fitch Expects to Rate International Lease Finance Corp's $2.5B Secured Notes 'BBB-'

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings expects to rate International Lease Finance Corp.'s (ILFC) $2.50 billion of senior secured notes 'BBB-'. These notes will be rated two notches above ILFC's long-term Issuer Default Rating (IDR) of 'BB.' Notching of the secured note rating primarily reflects superior collateral coverage with respect to the overall value, type and vintage of aircraft included in the collateral pool.

This rating action does not affect ILFC's existing long-term IDR of 'BB' or the other ratings nor the Evolving Rating Outlook. For further information, please refer to Fitch's press release dated April 30, 2010.

Fitch views this transaction positively as it represents further progress on financing plans to extend debt maturities and to improve liquidity. The initial collateral pool will comprise 122 aircraft and related leases. Based on the estimated value of the aircraft, the loan-to-value for this transaction will equal approximately 60% at closing. The type of aircraft will be evenly divided between narrow- and wide-bodied and will have a weighted average age of 7.7 years. Leases associated with the aircraft have a weighted average remaining term of 3.6 years.

In addition to customary affirmative and negative covenants, structural protection also includes aircraft and lessee concentration limits and substitution requirements. Also, the incurrence of secured debt to refinance maturing senior secured notes will require compliance with a loan-to-value ratio that is less than or equal to 63%.

Proceeds from the issuance of these notes are expected to be used to repay a potion of the $3.9 billion secured loan from AIG Funding, Inc. In connection with the repayment of this debt, the Federal Reserve Bank of New York (FRBNY) and AIG Funding have agreed to release liens on 98 aircraft and related equipment and leases that are part of the designated pool of aircraft and collateral securing the obligations under the notes and guarantees. In addition, the FRBNY and AIG Funding have indicated that they will release additional collateral of FRBNY's choosing such that the loan-to-value ratio of secured loans from AIG Funding, after giving effect to the repayment with the net proceeds from this offering, will be approximately the same as the loan-to-value ratio prior to repayment of the loan.

ILFC is a market leader in the leasing and remarketing of commercial jet aircraft to airlines around the world. As of June 30, 2010, ILFC owned an aircraft portfolio with a net book value of approximately $40 billion, consisting of approximately 950 aircraft.

Fitch's rating actions today are the result of a focused review of its 'Master Global Financial Institutions Criteria' dated Dec. 29, 2009 and 'Finance and Leasing Companies Criteria' dated Dec 30, 2009, available on the Fitch website at 'www.fitchratings.com'.

Fitch expects to assign the following rating:

--$2.5 billion senior secured notes 'BBB-';

Current ratings for ILFC and related subsidiaries are provided below:

ILFC

--Long-term IDR 'BB';

--Senior secured debt 'BBB-';

--Senior unsecured debt 'BB';

--Preferred stock at 'B';

Delos Aircraft Inc.

--Senior secured debt 'BB'.

ILFC E-Capital Trust I

--Preferred stock 'B'.

ILFC E-Capital Trust II

--Preferred stock 'B'.

Additional information is available at 'www.fitchratings.com'.

Related Research:

Finance and Leasing Companies Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493344

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Mohak Rao, 212-908-0559, New York
or
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