Originally Posted by
dera
So now that debt is increasing, and the terms are a lot worse than in the past, what happens?
Well, this:
https://www.fitchratings.com/researc...-bb-27-10-2021
You sell pass through trust certificates rather than bonds because these certificates collateral ( in this case
21 A321 NEOs and 5 ERJ 175s) can go directly to the purchasers in the event of a bankruptcy and don’t risk taking a haircut like other asset classes. They way you can borrow money at a little lower ate than you would otherwise need from a straight junk bond sale.
From the Fitch Rating ‘definitions’ page:
Fitch’s credit rating scale for issuers and issues is expressed using the categories ‘AAA’ to ‘BBB’ (investment grade) and ‘BB’ to ‘D’ (speculative grade) with an additional +/- for AA through CCC levels indicating relative differences of probability of default or recovery for issues.