[Infostock Daily= Reporter Song Jeong-hoon] Emergency lights were turned on in the liquidity of airlines in the aftermath of a new coronavirus infection (Corona 19 or COVID-19).
As major airlines' performance fell to a serious level, credit rating agencies lowered their credit rating on asset-backed securities (ABS).
Korea Investors Service said on April 13 that it lowered the ABS credit rating of Korean Air and Asiana Airlines on the 10th.
Korean Air ABS' credit rating dropped from 'A' to 'A-' and Asiana Airlines ABS from 'BBB +' to 'BBB'.
Air freight bond ABS refers to airlines financing air freight as collateral for future earnings.
Concerns over the downgrade of ABS credit rating have been steadily raised as long-term sales of airlines are expected to decline significantly due to Corona 19.
As of the end of last month, Asiana Airlines' ABS issuance balance was 468.8 billion won, and Korean Air was 1.32 trillion won.
The Korea Investors Service cited a serious decrease in the original collection of trusts due to the spread of Corona 19 due to major reasons for the change in rating.
Korean Air and Asiana Airlines have been severely reduced in recovery results since March, as most countries have implemented strong immigration restrictions.
Asiana Airlines' ABS recovery rate in March was 42 ~ 99% YoY, while Korean Air was 68 ~ 84% YoY.
Some even have a gloomy prospect that early repayment demands could be triggered as a red light lights on the ABS creditworthiness of the two airlines.
As of the end of last month, the balance of ABS for air freight bonds that Korean Air has to pay back amounts to 1.32 trillion won. Asiana Airlines also has to pay back 468.8 billion
won.
Reorter Song Jeong-hoon boxr@infostock.co.kr