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TEXT-S&P puts AWAS Aviation Capital 'BB' rating on watch positive

(The following statement was released by the rating agency)Overview

-- On Oct. 5, 2012, Dublin-based aircraft lessor AWAS Aviation CapitalLtd. announced that its board of directors had approved the conversion of $800million of shareholder loans into equity.

-- We are placing our ratings on AWAS, including the 'BB' corporatecredit rating, on CreditWatch with positive implications.

-- We expect to raise the ratings, including the corporate credit ratingto 'BB+' from 'BB', when the conversion is completed.

Rating ActionOn Oct. 5, 2012, Standard & Poor's Ratings Services placed its ratings,including the 'BB' corporate credit rating, on AWAS Aviation Capital Ltd. onCreditWatch with positive implications.

Rationale

The CreditWatch listing follows AWAS' Oct. 5 announcement that its board ofdirectors had approved the conversion of $800 million of shareholder loansinto equity. The conversion of shareholder loans would reduce AWAS' debt tocapital by about 8% to the high-70% area from the mid-80% area. However,because the company will still carry a heavy debt burden, which we expect toincrease as it uses debt to fund new aircraft deliveries, we expect funds fromoperations to debt to remain at about 9%.

The ratings on AWAS reflect its position as a large provider of aircraftoperating leases and its diversified fleet and airline customer base. Limitingcredit considerations include exposure to cyclical demand and lease rates foraircraft, a weaker financial profile than some of its competitors, and asubstantial percentage of encumbered assets, constraining options for raisingcapital. The ratings incorporate our expectations that these trends willcontinue over the next several quarters. Standard & Poor's characterizes AWAS'business risk profile as "satisfactory," its financial risk profile as"significant," and its liquidity as "adequate" under our criteria.

CreditWatch

We expect to raise the ratings on AWAS, including the corporate credit ratingto 'BB+' from 'BB', when the conversion of shareholder loans into equity iscompleted.

Related Criteria And Research2008 Corporate Criteria: Analytical Methodology, April 15, 2008Ratings ListRatings Placed On CreditWatchTo FromAWAS Aviation Capital Ltd.Corporate Credit Rating BB/Watch Pos/-- BB/Stable/--Senior Secured BBB-/Watch Pos BBB-Recovery Rating 1 1

Complete ratings information is available to subscribers of RatingsDirect onthe Global Credit Portal at

. All ratings affectedby this rating action can be found on Standard & Poor's public Web site at. Use the Ratings search box located in the leftcolumn.(New York Ratings Team)

((e-mail: pam.niimi@thomsonreuters.com; Reuters Messaging:pam.niimi.reuters.com@reuters.net; Tel:1-646-223-6330;))

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