Issuer Flash: AVIC International Leasing Co., Ltd.

Report date: 2026-08-20 Event date: 2026-06-26 Event title: 2026 Tracking Rating Report

1. Flash Conclusion

Lianhe Ratings maintained AVIC International Leasing Co., Ltd.'s (AVICIL) issuer rating and the ratings on the named outstanding domestic bonds at AAA / Stable in its 26 June 2026 tracking report. The action confirms the domestic support-backed credit framework rather than a material improvement in standalone financial strength. Lianhe continues to regard AVICIL as Aviation Industry Corporation of China (AVIC Group)'s only leasing platform and applies a one-notch shareholder-support adjustment, while also identifying large debt, high leverage, portfolio concentration and the need to monitor asset-quality pressure.

FY2025 figures support a mixed credit reading. The company reduced lease receivables, assets and total debt, but revenue and profit also declined as the portfolio contracted. At 31 March 2026, capital and reported coverage of identified NPLs were high by the agency's measures, but that coverage does not establish protection against pre-NPL migration, residual-value risk or concentrated-sector stress. The current ratio was only 83.35%, and the report did not provide a full maturity ladder, committed-facility availability, restricted-asset detail or offshore-structure analysis. The rating action is constructive for domestic funding access, but it does not establish an AVIC Group, SASAC or PRC legal guarantee, nor does it prove that cash on hand is freely available for all obligations.

2. Rating Action and Financial Indicators

Lianhe's report maintained the issuer and the named domestic bonds at AAA / Stable. It assesses AVICIL as strategically important because it is the sole leasing platform within AVIC Group, and identifies shareholder support in business channels and funding as the basis for its external-support adjustment. This does not create a contractual repayment commitment for every AVICIL, SPV or offshore obligation.

The report shows continued balance-sheet contraction in FY2025. Net finance-lease receivables declined to RMB88.65bn, total assets to RMB129.15bn and total debt to RMB95.78bn. Debt reduction is positive in isolation, but it occurred alongside a 18.3% decline in revenue to RMB8.32bn and an 8.0% decline in net profit to RMB1.55bn. The financial data should therefore be read as selective de-risking and lower earnings capacity rather than demonstrated deleveraging through sustained internal cash generation.

All financial figures are consolidated and sourced from Lianhe's report. The FY2025 period is annual; the 1Q26 data are unaudited and, as stated by Lianhe, related indicators are not annualised.

The funding indicators require a similarly qualified reading. FY2025 short-term debt fell to RMB35.61bn from RMB50.33bn in 2024, while long-term debt increased to RMB60.17bn from RMB56.77bn. This appears directionally favourable and reduced total debt from RMB107.09bn, but it cannot establish refinancing resilience without the missing maturity schedule and facility information. Cash-like assets of RMB10.67bn remained well below short-term debt. Lianhe also reports financing cash inflow before financing at RMB61.19bn and an interest-expense-to-total-debt ratio of 5.56% for FY2025. These figures demonstrate ongoing collection and funding activity, not committed unused liquidity or a fully reconciled cash-coverage ratio. The 1Q26 decline in cash-like assets to RMB8.91bn and current ratio to 83.35% reinforces the need to obtain the funding schedule rather than extrapolate from the annual debt reduction.

3. Credit Read-Through

The maintained rating recognises real strengths. AVICIL remains an important financing-leasing platform in the AVIC Group system, its funding channels are described as diversified, and its equity stood at RMB24.52bn at end-March 2026. The 1Q26 NPL ratio of 1.37% and provision coverage of 424.07% indicate high reported coverage of identified non-performing lease assets; they do not establish coverage of pre-NPL migration, residual-value or concentration risk. For domestic creditors, those factors and the retained AAA / Stable rating should continue to support market recognition.

The same report makes the limitations explicit. Lease assets remain concentrated in equipment, aviation and vessels; Lianhe notes that non-performing assets were concentrated in public utilities and equipment and that public-utility leasing had no new origination since 2025. The agency also flags high customer concentration and debt. Thus, a stable aggregate NPL ratio should not be treated as proof that credit risk has fallen across the portfolio. The next evidence required is the movement in sector NPLs, collections, restructurings and special-mention assets, particularly as the company adjusts the public-utility book and grows or reprices other exposures.

The financial trend also cautions against reading portfolio contraction as a complete cure for leverage. The reported asset-liability ratio was 81.13% and total-debt capitalization 79.72% at end-2025. At the same time, the agency's leverage measure improved to 4.75x at end-March 2026 from 4.90x at end-2025. This gradual improvement is constructive, but lease-receivable collection, new investment and debt repayment can move together in ways that are not visible in selected balance-sheet metrics. The flash therefore does not conclude that AVICIL has a self-funding liquidity profile; it identifies lower debt and preserved capital as positive inputs that must be tested against maturities, collateral and the sustainability of lease collections.

The same caution applies to the retained domestic rating. AAA / Stable is relevant for onshore market access and is based partly on the shareholder-support adjustment; it is not a probability-of-default estimate that can be transferred mechanically to offshore instruments or compared directly with international rating scales.

Ownership is a separate governance and support-channel watchpoint. Lianhe reports that the controlling-shareholder chain had pledged 98.137% of AVICIL's equity to AVIC Group by end-March 2026. The pledge does not alter the reported ultimate-control analysis, but it makes the condition and evolution of the intermediate shareholder structure relevant to market confidence. The rating report retains shareholder support; it does not demonstrate a legally enforceable AVIC Group liquidity facility, capital-injection undertaking, or guarantee of AVICIL debt. This confirms the boundary raised in the issuer's current additional discussions: rating support is meaningful, but neither it nor the company's leasing licence creates a statutory or sovereign payment obligation.

For bondholders, the immediate signal is stable but qualified. The report lists several domestic instruments and states that tracked bonds had paid interest normally as of the report date. That is useful evidence of current domestic debt-service performance, yet the report does not replace security-specific documentation. Investors in domestic, offshore or SPV obligations should still verify the named issuer, guarantee, ranking, security, maturity, cross-default and any keepwell or liquidity-support provisions before relying on the group-support narrative.

4. What To Watch Next

• The next periodic financial statements: lease receivables, new originations, sector NPLs, special-mention/restructured assets, collections, revenue and pre-provision profit.
• The maturity profile, committed bank lines, secured versus unsecured funding, restricted assets and cash location. These are necessary to convert the rating report's liquidity observations into a debt-service view.
• AVIC Group, AVIC Industry-Finance and AVIC Investment ownership/pledge disclosures, and any change in the rating agency's support-adjustment language.
• Public-utility and equipment portfolio remediation, including disposals, recoveries and whether risk migration offsets the reduction in public-utility exposure.
• Current rating actions and payment notices for the relevant bond, rather than inferring security-level protection from the issuer rating.

5. Sources

• Lianhe Ratings, 2026 Tracking Rating Report: AVIC International Leasing Co., Ltd., 26 June 2026, https://www.lhratings.com/reports/B0011822-P74661-2024-GZ2026.pdf. Used for the rating action, consolidated FY2025 / 1Q26 metrics, support assessment, asset-quality comments, ownership pledge and named-bond information.
• AVIC International Leasing, Issuer Summary, 20 May 2026; issuer notes and current additional-discussion reports. Used only to identify the prior credit view and outstanding support-boundary monitoring issues.