...Blended Ratings Approach: Enhanced Equipment Trust Certificates (EETCs) are hybrid corporate-structured debt securities that air carriers commonly use to finance aircraft equipment. Due to the bonds' hybrid characteristics, Fitch Ratings' approach incorporates elements of both the Corporates and Structured Finance rating methodologies. The methodology focuses on U.S. EETCs, but it can also be applied to non-U.S. structures with adjustments, if needed, for differences in legal regimes. Rationale for Separate Criteria: The primary rationale for separate EETC ratings criteria relates to the special treatment reserved for aviation assets under Section 1110 of the U.S. Bankruptcy Code and structural enhancements (including liquidity facilities and tranching) that reduce default risk for EETCs. Default probabilities and recovery expectations for EETC securities are not described completely by Fitch's general Corporates or Structured Finance methodologies....
