TEXT-S&P rates BOC Aviation's US$2 bil. MTN program 'BBB-'

(The following statement was released by the rating agency)

Sept 20 - Standard & Poor's Ratings Services today assigned its 'BBB-' rating to BOC

Aviation Pte. Ltd.'s US$2 billion multicurrency medium-term note program.

The rating is one notch below the 'BBB' corporate credit rating due to the

large percentage of secured debt in BOC Aviation's capital structure. The

company's secured debt was about 64% of its total assets as of June 30, 2012,

excluding any expected future issuances under the program. The company expects

to use the proceeds for new capital spending, funding for general corporate

purposes, or refinancing of existing borrowings.

The rating on BOC Aviation (BBB/Stable/--; axA/--) reflects the company's good

cash flow stability from long lease lives, sound competitive position, and

support from its 100%-owner Bank of China Ltd. (BOC: A/Stable/A-1;

cnAA+/cnA-1). A moderately higher leverage than that of other rated peers, and

the industry's exposure to cyclical demand and aircraft lease rates partly

offset these strengths. We assess BOC Aviation's stand-alone credit profile at

'bbb-'. Our rating incorporates a one-notch uplift because we consider BOC

Aviation to be a subsidiary with "moderately strategic importance" to BOC.

The outlook on the long-term corporate credit rating on the company is stable.

It reflects our expectation that BOC Aviation's financial risk profile will

remain broadly stable through 2014 despite a substantial capital spending plan

that will be funded through incremental debt. We anticipate that the company

will maintain a ratio of funds from operations (FFO) to debt of 6%-8% and a

ratio of debt to capital of less than 82%.

We believe an upgrade is unlikely until demand and lease rates for aircraft

lessors improve sustainably. BOC Aviation's ratio of FFO to debt staying above

12% on a sustainable basis would indicate such improvement.

We could lower the corporate credit rating if one or more of the following

occurs:

-- BOC Aviation increases its debt-funded capital spending beyond our

expectations, such that its ratio of debt to debt-plus-equity increases beyond

85%;

-- The company's ratio of FFO to debt falls below 5% on a sustainable

basis. This could materialize if the company's base monthly lease rate

declines below 0.65% (from our base-case assumption of 0.7%) while its average

funding cost exceeds 250 basis points over LIBOR; or

-- We believe BOC is likely to reduce its support.

RELATED CRITERIA AND RESEARCH

-- Bank of China Ltd., Dec. 28, 2011

-- Group Rating Methodology And Assumptions, Nov. 9, 2011

-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

-- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008

Source: http://news.yahoo.com/text-p-rates-boc-aviations-us-2-bil-104452280--sector.html

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