Kroll Bond Rating Agency has upgraded the issuer and senior unsecured ratings of Avolon Holdings Limited to A- from BBB+, with the outlook revised to stable.
The upgrade reflects Avolon’s expanding scale following its acquisition of Castlelake Aviation in 2025, alongside growth in its orderbook and improved visibility on future fleet development.
KBRA said the transaction accelerated Avolon’s franchise development, while the lessor has also strengthened its funding profile, with unsecured debt rising to 77% of total debt at year-end 2025, improving financial flexibility.
The agency highlighted improvements in asset quality, including a reduction in pandemic-era deferrals and receivables, as well as Avolon’s continued access to unsecured funding through market cycles.
Avolon’s credit profile remains supported by its position as one of the largest global lessors, a young and diversified fleet, and contracted lease revenues from a broad lessee base. KBRA also pointed to strong capital and liquidity metrics, with leverage at 2.5x debt-to-equity at year-end 2025.
Risks remain tied to the cyclical nature of the aviation sector and exposure to geopolitical disruption, including the ongoing Middle East conflict and higher fuel costs. However, KBRA said the impact on Avolon is expected to be manageable given its portfolio diversification and track record in managing restructurings.
The agency noted that around 42% of Avolon’s fleet by value comprises widebody aircraft, which are less liquid than narrowbodies, although future growth is expected to be focused on narrowbody aircraft.
KBRA also withdrew ratings for Castlelake Aviation and its financing entity following the completion of the acquisition and repayment of outstanding debt.
The stable outlook reflects expectations that Avolon will maintain strong liquidity, disciplined leverage and continued access to funding as it executes its growth strategy.