State-Owned Leasing Company GTLK Sees Outlook Downgraded by Fitch

Credit rating agency Fitch has downgraded the outlook for Russia’s State Transport Leasing Company (GTLK) to stable from positive, whilst affirming the Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at ‘BB+’.

A state-owned business, GTLK is Russia’s largest lease company and is the nation’s second biggest aircraft lessor.

The outlook revision directly reflects the significant impact of the global COVID-19 pandemic on the Russian economy – and on the propensity of the Russian sovereign to support GTLK.

With mounting pressure on government budgets as spending priorities increase on multiple fronts, the new rating reflects a high probability of support from the government, although the likelihood of such support, given these mounting pressures, is no longer expected, according to

On the plus side, Fitch has not revised the GTLK outlook further down to negative, as it does not envisage a longer term weakening trend. Currently some 14 billion rubles ($186.5 million) has been allocated for GTLK’s capital injection in the federal budget for 2020. Additionally, its management is expecting capital injections in 2020 on various other transport development programmes and extraordinary support to compensate for lost revenue.

Furthermore, the 23 billion-ruble ($306 million) state subsidy for domestic air carriers announced last month by the Russian authorities will at least mildly alleviate the pressure on GTLK’s asset value.

Fitch nevertheless expects the pandemic to bring additional pressures on the leasing company’s intrinsic creditworthiness, given the company’s large exposure to the vulnerable rolling-stock sector and to the highly impacted aviation sector.

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