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Fitch Rates Aviation Capital's Senior Unsecured Debt 'BBB-'

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has assigned a rating of 'BBB-' to Aviation Capital Group Corp.'s (ACG) $150 million Singapore Dollar senior unsecured debt issuance under its multicurrency medium-term note programme. The long-term Issuer Default Rating (IDR) of ACG is not impacted, since overall capitalization and leverage subsequent this debt issuance were already incorporated in Fitch's rating review of ACG on Sept. 12, 2012.

Ratings assigned to ACG reflect consistent operating performance, an attractive aircraft portfolio, a diverse funding profile, appropriate leverage levels and the relationship between ACG and its 100% owner, Pacific LifeCorp. (PLC, IDR 'A-').

ACG's credit profile has benefited from its ownership and demonstrated financial support provided by PLC and its main insurance operating entity, Pacific Life Insurance Company (PLIC, IDR 'A'), as reflected by the one notch uplift from ACG's stand-alone credit profile of 'BB+'. However, Fitch views future support as uncertain, particularly in a stress scenario.

RATING DRIVERS AND SENSITIVITIES

Fitch believes positive rating momentum is currently limited based on ACG's current capitalization on a stand-alone basis. In addition, further uplift in ACG's current ratings over the near term is not envisioned unless balance sheet leverage is further reduced to below 3.5x. Conversely, negative rating actions could result from an unwillingness or inability of PLC to provide timely support. Significant deterioration in financial performance and a material decline in operating cash flow resulting from significant weakening of sector or economic conditions, or a meaningful increase in balance sheet leverage could also generate negative rating momentum.

Fitch assigns the following rating:

Aviation Capital Group Corp.

--Senior unsecured debt 'BBB-'.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research

--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012);

--'Finance and Leasing Companies Criteria' (Dec. 12, 2011);

--'Rating FI Subsidiaries and Holding Companies' (Aug. 10, 2012);

--'Fitch Affirms Large Equipment Lessor Ratings Following Peer Review; Outlook Stable' (Sept. 12, 2012);

--'Aircraft Leasing Sector Review' (July 18, 2012).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181

Finance and Leasing Companies Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=659834

Rating FI Subsidiaries and Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679209

Aircraft Leasing Sector Review

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=683404

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Fitch Ratings
Primary Analyst
Johann Juan, +1-312-368-3339
Director
Fitch, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Mohak Rao, CFA, +1-212-908-0559
Director
or
Committee Chairperson
Nathan Flanders, +1-212-908-0827
Managing Director
or
Media Relations
Brian Bertsch, New York, +1-212-908-0549
brian.bertsch@fitchratings.com

Source: Fitch Ratings

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