Morningstar DBRS Publishes Final Rating Structured Aviation Transactions Methodology and Structured Aviation Surveillance Appendix XX

Morningstar DBRS finalized its "Rating Structured Aviation Transactions" methodology (the Finalized Methodology). This Finalized Methodology presents the criteria for which structured aviation asset class ratings are assigned. The Finalized Methodology supersedes the prior version published on August 6, 2024 (which was titled "Rating Structured Aircraft Transactions") and is effective as of January 10, 2025.

No comments were received during the Request for Comment period.

Under the updated Finalized Methodology, Morningstar DBRS incorporates key methodology updates that include the following:
(1) Incorporation of a newly acquired aircraft and aircraft engine value dataset into the analysis for published market value decline (MVD) ranges and updating such ranges accordingly.
(2) Incorporation of AAA rating assumptions into the published MVD ranges, considering analysis of the newly acquired dataset, and, where applicable, other transaction considerations.
(3) Incorporation of aircraft engines rating assumptions, which considered analysis of the newly acquired dataset and provide additional transparency.
(4) Extension of certain ranges to provide for accurate assumptions for engines and certain aircraft types.

Morningstar DBRS deems the updates to the Finalized Methodology to be material. The reason for the proposed material changes is to update certain assumptions (listed above) based upon updated datasets and expand Morningstar DBRS' analytical approaches to include aircraft engines. Morningstar DBRS expects limited impact on outstanding public and private credit ratings as a result of these material changes. Most of the affected outstanding credit ratings under these methodologies are expected to be confirmed, with a limited number of expected upgrades or downgrades with a magnitude of one to two notches.

In addition, Morningstar DBRS published an updated version of its "Morningstar DBRS Master U.S. ABS Surveillance" (Appendix XX -- U.S. Structured Aviation Transactions) (the Surveillance Methodology), which presents the criteria for which structured aviation asset class ratings are monitored. The Surveillance Methodology supersedes the prior version published on December 5, 2024, and is effective as of January 10, 2025. Morningstar DBRS deems the update to the Surveillance Methodology not to be material.

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.

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

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