Morningstar DBRS Finalizes Methodologies for Rating Aviation Asset Secured Recourse Debt and Morningstar DBRS Master U.S. ABS Surveillance Appendix XXXVI

Morningstar DBRS finalized its proposed new methodologies (the Finalized Methodologies) to be used to determine credit ratings in the asset class of airline secured recourse obligations secured by aviation assets including the following:

(1) Aircraft and Engine Enhanced Equipment Trust Certificates (EETCs);
(2) Dynamic Pooled-Backed (Aircraft Engines and Spare Parts); and
(3) Airline Mileage-Loyalty Programs.

Finalized Methodologies:

-- "Rating Aviation Asset Secured Recourse Debt" (AASRD New Issue Methodology)
-- "Morningstar DBRS Master U.S. ABS Surveillance" - Appendix XXXVI - Rating Aviation Asset Secured Recourse Debt (AASRD Surveillance Appendix)

The publication of the Finalized Methodologies follows the conclusion of the Request for Comment (RFC) period that ended on October 24, 2024. Morningstar DBRS received no comments during the RFC period. The Finalized Methodologies are effective as of today.

All comments received during the request for comment period have been published to the Morningstar DBRS website, except in cases where confidentiality is requested by the respondent.

AASRD New Issue Methodology
Please refer to the new AASRD New Issue Methodology, which represents the principal asset class methodology that Morningstar DBRS applies when assigning credit ratings in the asset class of airline secured recourse obligations secured by aviation assets.

Morningstar DBRS currently rates transactions in this asset class by applying the "Global Methodology for Rating Non-Bank Financial Institutions," "Rating Structured Aircraft Transactions," the "Global Methodology for Rating Companies in the Airline Industry," and the "Global Methodology for Rating Companies in the Services Industry" (the Existing NBFI Methodologies). Morningstar DBRS deems the changes to the Existing NBFI Methodologies to be material, as reflected in the Finalized Methodologies, and does not expect the material changes to have an impact on any outstanding credit ratings.

Morningstar DBRS also currently rates one transaction in this asset class by applying the "Global Corporate Criteria" and "Global Methodology for Rating Project Finance" (the Existing Corporate Methodologies). Morningstar DBRS deems the changes to the Existing Corporate Methodologies to be material, as reflected in the Finalized Methodologies, and expects the material changes to have a positive impact of up to three notches on outstanding credit ratings.

The rationale for the material changes to the approaches outlined in the Existing NBFI Methodologies Existing Corporate Methodologies and incorporated into the Finalized Methodologies is to publish a stand-alone credit rating methodology to rate airline recourse obligations secured by aviation assets.

AASRD Surveillance Methodology
Please refer to the new AASRD Surveillance Appendix to the existing "Morningstar DBRS Master U.S. ABS Surveillance" methodology, which presents the criteria that Morningstar DBRS applies in connection with the surveillance of credit ratings assigned using the AASRD New Issue Methodology.

sfcomments@morningstar.com

Morningstar DBRS publishes on its website all comments received, except in cases where confidentiality is requested by the respondent.

Notes:
Morningstar DBRS methodologies are publicly available on its website https://dbrs.morningstar.com under Methodologies & Criteria.

For more information on this methodology or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.