Fitch Ratings has affirmed the ratings for Delta Air Lines' 2007-1 class A certificates at "BBB+". At the same time, the ratings agency has affirmed Delta's issuer default rating of "B+" with a positive outlook.
"The A tranche ratings are primarily supported by the high degree of overcollateralisation in the transaction with the affirmation factor (i.e. the likelihood that Delta would affirm the aircraft in the event of a bankruptcy), and Delta's credit quality considered as secondary factors," says Fitch. "The A-tranche rating also benefits from an 18-month liquidity facility provided by Hessen-Thueringen Girozentrale."
The ratings are limited by the average age of the underlying collateral pool (roughly 13 years) and the lack of an immediate cross-default provision, says Fitch.
Fitch estimates the current loan-to-value at 54.2%, suggesting a "significant" amount of overcollateralisation. The maximum LTV calculated in a stress scenario (primary rating driver) is estimated to remain below 100% for the next several years using Fitch's 'BBB' level stresses.
The collateral is "well diversified by aircraft type, but has a heavy concentration" of widebody aircraft with 81% of the collateral pool as calculated by value, says Fitch. The ratings agency categorises all widebodies in the pool as "Tier 2".
The collateral also includes 11 737-800s, which Fitch considers to be "high-quality Tier 1" aircraft.