BOC Aviation's (HKG:2588) increased earnings should keep its leverage stable amid its fleet expansion, S&P Global Ratings said in a Monday release.
Delayed aircraft deliveries in 2024 resulted in lower-than-expected capital expenditure, contributing to a modest decline in the company's leverage, S&P said.
However, the company's use of purchase-and-leaseback (PLB) finance lease arrangements has helped bridge its capital expenditure gap amid delayed deliveries, helping to boost interest income and offset lower lease rental income, S&P said.
The rating agency expects the company to continue using PLB transactions to meet its capital expenditure targets, which could notably increase debt.
However, projected revenue growth driven by a rise in lease rate factor, an expanding fleet, and better interest income should keep credit metrics stable, S&P said.
The aircraft leasing company will see a rise in its lease rate factor due to continued growth in Asia-Pacific air traffic and airlines' increased reliance on lessors amid supply chain issues, the rating agency said.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.