Rationale

The sale will benefit ILFC by providing clarity regarding its ownership and potentially expanding its access to clients and funding sources in growing Asian markets. Uncertainty regarding ILFC's ultimate disposition has been a distraction to its business since AIG designated the company a non-core holding in 2010. To the extent that stronger strategic alignment develops between ILFC and its new owners, the consortium's interest is more likely to be longer term, which could aid its market access and business opportunities.

The investor group, which includes New China Trust Co. Ltd., China Aviation Industrial Fund and P3 Investments Ltd., will acquire 80.1% of ILFC for $4.23 billion. If the buyers exercise an option to acquire an additional 9.9% stake, the investor group will expand to include New China Life Insurance Co. Ltd. and an investment arm of ICBC International. The sale, subject to regulatory approval, is slated to close during the second quarter of 2013.

"This transaction will improve the stability of ILFC's ownership, lend new strategic purpose to its operations, and could open up new avenues of funding for its aircraft," said Moody's senior analyst Mark Wasden. The investment interests of consortium members likely relate to advancing and capitalizing on growth in China for air travel. Given its global scale and strong aircraft order backlog, ILFC seems well situated competitively to contribute to, and profit from, the further development of the Chinese aviation sector by leasing new aircraft to air carriers that serve this expanding market. ILFC already has a leading position in China, with some 180 of its aircraft operated by Chinese carriers. Still, the extent to which ILFC's credit profile will benefit from the sale depends on the consortium members' strategic and financial objectives and their influence on ILFC's growth rate, portfolio concentrations and financial leverage.

Consortium members could also help ILFC with its financing needs. At September 30, 2012 ILFC had $24.2 billion of debt outstanding to finance its $34.9 billion portfolio of 918 owned aircraft. At that date, ILFC also had commitments to purchase 233 new aircraft for delivery through 2019 with a remaining outlay of $17.7 billion. Given ILFC's large recurring funding needs, evolution of the firm's funding and liquidity profile under new ownership will be a key rating consideration.

Upon closing of the sale, Moody's currently expects to maintain a positive rating outlook to continue to observe and develop views regarding the long-term effects of new ownership on ILFC's credit profile. Moody's will consider governance under the new owners; management's ongoing operational independence; ILFC's appetite for growth, concentrations, and leverage; its access to funding; and its liquidity management as part of its ongoing monitoring of the firm's evolving credit profile. Moody's will also assess the credit implications associated with the transaction accounting in terms of its effects on ILFC's reported financial condition and performance.

ILFC's Ba3 Corporate Family rating reflects its leading franchise positioning, diversity of geographic, aircraft, and customer risk exposures within the specialized aircraft leasing sector, and resilient operating cash flow. Constraints include ILFC's challenges associated with sustaining lease margin improvements and generating attractive returns on equity. Additional credit challenges include the monoline and cyclical nature of ILFC's business, its exposure to aircraft residual value risks, and its reliance on confidence-sensitive wholesale funding.

International Lease Finance Corporation, headquartered in Los Angeles, California, is a major owner-lessor of commercial aircraft.

The methodology used in this rating was Finance Company Global Rating Methodology published in March 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Rating outlook changed to positive from stable:

International Lease Finance Corporation

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Mark L. Wasden VP - Senior Credit Officer Financial Institutions Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Robert Franklyn Young MD - Financial Institutions Financial Institutions Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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