Fitch Ratings has affirmed Dubai Aerospace Enterprise's (DAE) BBB rating with outlook stable.
This follows the lessor's recent announcement that it will acquire Macquarie AirFinance for an enterprise value of around $7bn.
Upon close, Fitch said it expects to upgrade DAE's standalone credit profile from BBB- to BBB, driven by the lessor's larger scale following the acquisition of Macquarie as well as its acquisition of Nordic Aviation Capital (NAC) last year.
“[Macquarie AirFinance] will become an integral part of DAE's overall aircraft lessor franchise once the acquisition is complete,” said Fitch.
The deal is expected to close in the third quarter of this year, following regulatory approvals.
Fitch has also placed Macquarie AirFinance's BB+ long-term issuer default rating on ‘rating watch positive’ following the DAE announcement.
DAE will add 37 new airline customers to its portfolio, including seven new country exposures upon closing.
Macquarie's fleet consists of 352 commercial aircraft, including future commitments, leased to 83 airline customers across 48 countries.
The combined company will have a pro forma fleet of 1,029 owned, managed, and committed aircraft — serving 191 airlines in 79 countries. Additionally, around 70% of the combined fleet will comprise of narrowbodies.
The deal will be funded with a combination of debt and equity. The lessor said this approach will support its current investment grade ratings and its goal of being upgraded. The company has doubled its franchise over the past 18 months to support this aim.
The transaction has been approved by DAE's board and is expected to close in the second half of this year, following regulatory approvals.
Allen Overy Shearman Sterling and KPMG advised DAE on the deal.
JP Morgan Securities and Macquarie Capital acted as financial advisors to Macquarie AirFinance.