Standard & Poor's recent action to downgrade the senior unsecured ratings of nine major airlines from BB+ to BBB-, including British Airways, is largely expected to exacerbate the troubles of already pressured airline-related asset-backed deals.

If recalling the past paints a likely scenario, the latest action could indeed have implications for outstanding CDOs with airline exposure. In the recent past Moody's Investors Service downgraded the class C notes of Leonardo Synthetic plc to A3 from A2. "Leonardo Synthetic, where the underlying [collateral] is solely aircraft loans, could be particularly vulnerable," commented analysts at Dresdner Kleinwort Wasserstein.

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